IN DEPTH: AWG Regulatory Roundup — Extended Producer Responsibility (EPR) for Packaging
Extended Producer Responsibility (EPR) for Packaging: New Year, New Regulatory Burden
Distributors of cosmetics, dietary supplements, personal care products, medical devices, and other packaged goods should take note of a growing trend in state law that will affect their business operations and, potentially, their bottom lines.
As of January of this year, seven states (California, Colorado, Maine, Maryland, Minnesota, Oregon, and Washington) have enacted laws that make companies placing packaged products into the marketplace financially and operationally responsible for the “end-of-life” packaging management. These Extended Producer Responsibility (EPR) laws represent a fundamental shift in how businesses will be required to manage packaging waste costs and obligations, while relieving municipalities of these obligations.
The number of states imposing EPR requirements is increasing, with additional states moving toward passing similar laws. Given the complexity and rapid evolution of EPR requirements, early and strategic preparation is essential. Companies that begin compliance work now can avoid penalties, reduce fees, and potentially turn regulatory obligations into competitive advantages.
Who is Affected?
EPR laws impose obligations on “producers,” which can be interpreted to include manufacturers and other types of companies. Most state EPR programs use a tiered hierarchy to determine who bears responsibility for packaging placed on the market. For example:
- Brand owners – The company whose brand appears on the product packaging, regardless of whether they manufacture the product;
- Licensee or trademark holders – If the brand owner has no U.S. presence, the entity licensed to use the brand;
- Importers – The company that imports packaged products into the U.S. when no domestic brand owner exists;
- Manufacturers – In limited cases, the contract manufacturer or co-packer; and potentially
- Distributor or retailers – The backstop obligated party if no upstream entity qualifies.
Thus, under appropriate circumstances, private label distributors of third-party devices can be designated as responsible “producers” of their store-brand products, even though they perform no manufacturing operations. Likewise, e-commerce sellers and online marketplaces may be obligated producers for products they import or sell under their own brand name. Importers can also bear responsibility when foreign brand owners have no U.S. presence.
What Is Required?
Although state law can vary, EPR compliance generally involves four primary obligations:
Join a Producer Responsibility Organization (PRO)
Producers must register with and join an approved PRO. PROs are nonprofit entities that assist in managing compliance for their member companies. PROs collect fees, submit stewardship plans to state agencies, and fund recycling infrastructure.
Report Detailed Packaging Data
EPR programs require producers to collect and report specific data about the packaging materials they introduce into state distribution. This data provides the basis for fee calculations, recycling targets, and program performance metrics. Typical data requirements include:
- Material type and weight – Specific material composition (plastic type, paper grade, metal, glass, etc.) and weight in pounds or kilograms for each packaging component;
- Packaging format – Primary, secondary, or tertiary packaging; rigid vs. flexible; packaging application (bottle, box, pouch, film, etc.);
- Sales volume – Number of units sold or distributed in the state during the reporting period;
- Recyclability status – Whether the packaging is recyclable, compostable, or neither under state-specific criteria;
- Recycled content – Percentage and type of post-consumer recycled (PCR) content; and
- Brands – All the brands for which the producer is responsible.
Data reporting is an ongoing obligation, and most states require at least one annual data submission, while others require semi-annual or quarterly updates for large producers.
Pay Fees to Fund Recycling Systems
Producers pay annual or periodic fees to the PRO based on the type, weight, and recyclability of packaging they place on the market. These fees are intended to cover the costs of collection, sorting, processing, infrastructure upgrades, and consumer education, relieving local governments of these expenses.
The fees due are “eco-modulated,” meaning they vary based on the materials’ environmental impact. Factors that can increase fees include difficult-to-recycle materials (e.g., black plastic, multi-layer films, PVC), low recycled content, non-standardized formats that complicate sorting, and the presence of problematic additives (e.g., PFAS).
Factors that can potentially reduce fees include high-recyclability materials (as identified by the state), high percentage of post-consumer recycled materials, lightweight or source-reduced packaging, and reusable or refillable formats.
Fee schedules are designed by PROs and approved by state environmental agencies. They are expected to evolve as local recycling infrastructure and program requirements change.
Comply with Design and Performance Standards
Beyond imposing financial obligations on producers, EPR laws are also intended to encourage packaging that meets recyclability and content standards. For example:
- Requiring 100% recyclable or compostable packaging at a future date (e.g., California by 2032);
- Minimum recycled content targets for certain materials;
- Prohibitions on specific materials; and
- Recycling labeling requirements.
Penalties for Noncompliance: Financial and Operational Risks
States have granted environmental agencies broad enforcement authority to impose monetary penalties for noncompliance. These penalties vary by jurisdiction. For example:
California: Up to $50,000 per day for failing to register, report, or pay fees.
Colorado: $5,000 for first violation; each day of noncompliance is a separate violation.
Maine: $100 to $10,000 per day; additional penalties for repeat noncompliance.
Maryland: Up to $5,000 per violation; escalates for repeated violations.
Minnesota: Up to $25,000 per violation; can escalate to $50,000–$100,000 for repeat violations
Oregon: $25,000 per violation; each day counted separately for ongoing noncompliance.
Washington: Up to $10,000 per violation.
In addition to monetary penalties, noncompliance can result in market access restrictions, public notifications, and potential civil enforcement actions.
Getting Ready for EPR Compliance
Given the complexity and rapid evolution of EPR requirements, early and strategic preparation is essential. Preparation will help companies avoid penalties, reduce fees, and potentially turn regulatory obligations into competitive advantages over noncompliant competitors.
Map Your EPR Exposure and Determine Your Producer Status
The logical first step is to determine the nature and level of your exposure to assess how EPR compliance may affect your business operations. This can include identifying the jurisdictions where your packaged products are sold, distributed, or imported; reviewing the relevant state’s definitions of “producer” to determine your company’s status for each product line; and identifying any exemptions that may apply under state law.
Establish and Empower an EPR-Focused Compliance Structure
EPR compliance requires cross-functional coordination across packaging, procurement, sustainability, legal, and regulatory teams. When establishing your compliance structure, designate a single person to lead the team and ensure that person reports directly to management. Likewise, it will be important to establish a cross-functional team (e.g., product development, supply chain, sustainability, regulatory, and finance functions), identify personnel, and assign responsibilities for data collection, supplier engagement, reporting, fee payment, and design changes.
Establish a Packaging Data System and Infrastructure
Most companies lack a system to capture the type and amount of packaging data required for EPR compliance, and accurate, auditable data is the foundation of EPR requirements. A logical first step is to identify where a company’s packaging data currently resides (e.g., bills of materials, purchase orders, supplier spec sheets), assess data gaps, and create a single system to consolidate it. Attention should also be given to ensure the system is auditable and that data is accurate, complete, and traceable. Likewise, an EPR record-keeping system should maintain supporting documentation (e.g., supplier declarations, lab test results, etc.) to ensure the accuracy of the data in the event of an external EPR audit.
Post Implementation Consideration: Fee Reduction
Among other things, EPR laws are intended to incentivize the production and use of recyclable packaging materials. Accordingly, once a company has established and activated its EPR compliance system and registered with a PRO, it may seek to redesign its packaging in a way that reduces its EPR fee burden. Methods to achieve this goal can potentially include:
- Prioritizing recyclability by shifting to packaging forms that are widely accepted in curbside recycling programs;
- Increasing the content of recycled materials as source materials with higher post-consumer recycled (PCR) content can reduce fees;
- Reducing packaging weight to minimize both material costs and those weight-based EPR fees; and
- Phasing out the use of hard-to-recycle formats (e.g., black plastic, PVC, multi-layer films with barriers) and additives (e.g., PFAS).
Key Takeaways
State EPR requirements could significantly affect how businesses manage packaging and packaging waste. With seven states already implementing EPR requirements and more on the horizon, affected companies should not delay in assessing their obligations, building data systems, registering with PROs, and begin redesigning packaging to the company’s best advantage. The financial and operational consequences of noncompliance can be significant, but companies that approach EPR strategically can potentially reduce costs, mitigate risks, and position themselves as sustainability leaders in their industries. We are here to help with any questions you may have.
Key Contact
Evan Phelps | [email protected] | 202.559.2568
