One of the most urgent compliance topics involves Extended Producer Responsibility (EPR) laws, now on the books in seven states. Although the laws differ in some respects, precluding a one-size-fits-all compliance approach, they require immediate attention end could prove expensive. This post aims to answer some frequent questions we get, and hopefully arm you with basic information for your affected business clients.
What are EPR laws?
These are laws designed to improve the “circularity” of common packaging materials by requiring the establishment of take back and other strategies for waste “disposal.” While EPR laws have existed in the U.S. for years for specific products like paint, electronics, mattresses and batteries, over the past few years they have expanded to include consumer packaging and even textiles, glass and wood.
What states should I worry about?
This is no longer an isolated issue. Right now, there are seven states with EPR laws, one of which is California. At least eight more states including New York, Massachusetts, Rhode Island, New Jersey, Illinois, Tennessee, North Carolina, and Hawaii have introduced comprehensive EPR bills. Still others are watching and developing legislation. The seven states with EPR laws now on the books are California, Washington, Oregon, Maine, Colorado, Minnesota and Maryland.
If I am not located in an EPR state, do I still need to worry about it?
Yes. All of the state EPR laws purport to apply to out of state producers of a certain size that sell covered products (often paper or plastic packaging) into a state. For example, California defines “covered producer” as the brand owner/manufacturer, or if there is no brand owner/manufacturer, the importer or distributor. If none of the above entities can be identified, California designates either the retailer or the entity responsible for the first point of sale into the state. There are exemptions for smaller producers.
What should I do if I am covered?
Some states have already required registration be done. For others, the date is coming soon. Companies that may be subject to these laws should start evaluating their potential obligations as soon as possible.
A Covered Producer will either have to adopt its own recycling plan or register with the state’s designated Producer Responsibility Organization (PRO) and pay a fee. The name of each PRO is available online.
Generally speaking, Covered Producers are required to ensure that their packaging is recyclable or compostable by a future date and in the meantime participate in funding recycling programs through the PRO.
Producers must also report data on the amount and type of covered products placed on the market.
Is it expensive?
The PRO will decide what fees should be paid by each producer based on the weight and type of material. The fees can be significant, however, and may trigger scrutiny from each company’s CFO. In California alone, the PRO will be responsible to pay the state $500 m annually, irrespective of the operational costs it has.
The goals of the fees are to fund takeback programs and to incentivize producers to switch to fully recyclable packaging materials.
Are their fines for noncompliance?
Yes. They vary by state, but can be substantial, ranging from $5,000 to $100,000 per day.-
There are a lot of lawsuits. Will that stall the programs?
The implementation of some EPR programs has been challenged in court in some states by a variety of impacted producers and producer groups. The outcome of these cases is uncertain. Most independent consultants advise companies to begin preparing for compliance. This may be expensive now, but fines for EPR noncompliance can be even more severe.
