U.S. Extended Producer Responsibility compliance for packaging and paper products begins: Is your business ready?

Extended Producer Responsibility (EPR) compliance deadlines have arrived in the U.S., with additional deadlines quickly approaching, particularly for Oregon and Colorado, for “producers” of certain packaging, paper products, and food serviceware. EPR laws are frameworks that assign responsibility for end-of-life management (i.e., recycling and disposal) of certain materials, such as consumer packaging, to the producers of those covered materials. They typically require obligated producers to register for the EPR program, report data concerning the covered materials they produce, and pay fees into the EPR program, aiming to enhance recycling services, reduce waste, and encourage reuse. Determining who is an obligated producer, what is a covered material, and whether exemptions may apply requires an evaluation of both business operations and applicable requirements, which vary from state to state, to avoid potential financial penalties.

To date, several states have enacted EPR laws for packaging, including California, Colorado, Maine, Maryland, Minnesota, Oregon, and Washington, while the number of states proposing similar legislation continues to grow. Relevant bills include:

• California’s Plastic Pollution Prevention and Packaging Producer Responsibility Act (SB 54)
• Colorado’s Producer Responsibility Program for Statewide Recycling Act (HB 22-1355)
• Oregon’s Plastic Pollution and Recycling Modernization Act (SB-582B)
• Minnesota’s Packaging Waste and Cost Reduction Act (HF 3577).

Together with the relevant implementing regulations, as well as various guidance resources, these EPR laws establish key definitions, requirements, and restrictions.

“Covered Materials” and Obligated “Producers”

While each state’s approach varies slightly, “covered materials” or products that are included in the scope of these EPR laws are some variation of packaging materials (e.g., cardboard, plastic, glass), single-use foodservice items (e.g., sandwich clamshells, to-go containers, paper cups), and/or certain types of paper products (e.g., magazines and coupon booklets). Different materials are also further defined, with various exclusions that may apply—for example, packaging for federally-regulated medical devices is often excluded.

Obligated “producers”—i.e., those responsible for EPR obligations—also vary slightly from state to state and, in some instances, from covered material to covered material. Generally, though, obligated producers are identified based on a designated hierarchy, with brand owners being first in line, brand or trademark licensees being second in line, and U.S. importers being third in line should the first two not be present in the U.S.

Generally, obligated producers can pursue individual compliance plans or join a Producer Responsibility Organization (PRO), an entity designated by the state to manage producer compliance with the state’s EPR program. Individual compliance can be significantly more challenging (and more costly) than joining a PRO and may require pre-approval by the relevant state agency. Currently, the Circular Action Alliance (CAA) is the PRO for all the states that have selected a PRO so far. Each state has (or will have) deadlines for certain actions, such as providing notice of intent to pursue an individual compliance plan, to register with the PRO, or to stop selling covered materials in the state without having an approved individual compliance plan or having registered with the PRO.

Examples from Oregon and Colorado

To demonstrate how the definitions and scopes of states’ EPR laws can vary, a few unique details from the Oregon and Colorado programs are highlighted below:

1. Obligated Producer for Oregon Food Serviceware: In addition to packaging and paper products, Oregon introduced a separate category of covered materials, “food serviceware.” The obligated producer for this category is not based on the conventional producer hierarchy and is simply the person that first sells the food serviceware in or into Oregon.
2. Colorado Exclusion of Business-to-Business Packaging: Colorado’s definition of packaging material excludes those used in business-to-business (or “B2B”) transactions where a covered material is not intended to be distributed to the end consumer and those used solely in transportation or distribution to non-consumers, such as shipping boxes, pallets, and pallet wrap. In Oregon, only pallets would be exempt.
3. Returnable Beverage Containers: Returnable beverage containers are excluded as covered materials under the Oregon program since they are already subject to a “bottle deposit bill.” A similar exclusion would apply in Colorado; however, Colorado does not currently have a returnable container deposition regulation, so beverage bottles (and their secondary packaging) would be in-scope-covered materials.

Exemptions

In some instances, businesses that would otherwise be obligated producers under EPR programs may qualify for limited exemptions provided under each state’s program. For example, “small producers” are typically those below a certain global revenue threshold (e.g., $5 million in the most recent fiscal year for Oregon) or tonnage of covered materials used in the state (e.g., less than one ton sold or distributed within or into Colorado during the prior calendar year). They may also include nonprofit organizations and state or local governments. However, additional exemptions may exist, including industry-specific exemptions in Colorado, such as for builders, construction companies, or construction contractors.

What Steps Should Companies Be Taking?

Businesses that suspect they may be a “producer” of “covered materials” under one or more U.S. EPR programs for packaging, paper products, or food serviceware should gather the necessary information and consult with legal counsel to evaluate potential applicability or exemptions. In particular, for businesses that may be obligated producers in Oregon or Colorado, it is important to properly evaluate and chart a course of action to ensure compliance and avoid potential penalties, given recent and upcoming deadlines. Additionally, it is important to continue to monitor legislative and rulemaking developments on this topic across the country to prepare for changes or additions to existing requirements.

Clark Hill’s ESG & Sustainability advisory practice deploys multidisciplinary attorneys, consultants, and professionals to advise clients across industries and sectors. Our team includes experienced Environmental & Natural Resources, Corporate, and Litigation attorneys, who counsel clients on a range of issues, including EPR requirements and how to navigate current and emerging compliance obligations.

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