You Are The 'Producer' in Extended Producer Responsibility

State Regulators Mean You!

?Extended Producer Responsibility (EPR) in packaging is here, and it will significantly impact your business—starting now. If you’re not acting, you’re already behind. Here's what you need to know to catch up:

1. You Are the "Producer": Many brands mistakenly believe "Producer" refers to the packaging manufacturer (e.g., Sealed Air, 3M). It doesn’t. If you are the brand owner of goods being packaged, you are responsible for reporting the packaging you buy. Even if a co-manufacturer handles production and sells you a packaged product and you don’t actually buy ‘the box’, the responsibility lies with you. The reasoning is that you are calling the shots on how your product is packaged for retail and distribution, you are the decision maker for packaging choices.

2. There Are Thresholds: If your business earns about $5M in revenue, or that is your goal, from any sources not just a single item you are packaging, you should already be registered with the relevant Producer Responsibility Organization (PRO) for EPR states where your goods may be sold immediately. If you are unsure whether your goods are sold in EPR states, there is no harm or cost to register while you work through the details. This gives you access to more tools that help you determine for certain if you are covered by EPR, and how to work toward compliance with reporting of data and payment of fees. But failure to register now could lead to legal liabilities and fines, on top of still owing the fees. Oregon’s deadline, for example, is coming up on March 31.?

?3. 2024 Packaging Data Will Dictate 2025 Costs: You will be taxed on your 2024 packaging use, not future recyclable aspirations. What are these fees to be used for? EPR shifts recycling costs to you, The Producer. Through state-mandated fees, you, rather than tax ratepayers as they do now, will fund waste management, collection and recycling. You must act now to optimize your packaging to mitigate financial burdens for future years, but you will pay this year based on your designs and materials from last year.?

4. Your Operating Cost Basis Has Changed: Until your registration is complete, and 2024 data is reported, the 2025 fee rate for your packaging remains unknown. It’s already Q2 2025— when you get that rate, how fast can you adapt to avoid escalating costs from non-recyclable materials in 2025 and 2026? How much have you reserved in your budget for these new fees? How much will packaging changes need to save you to get you a net benefit? Do you have the resources to work on life cycle assessment and redesign or do you need to hire fractionally or use consultants to shore up your team?? What if better packaging has a higher unit cost but lowers your annual fees for a net benefit, are you ready to accommodate that change in cash flow or retail pricing?

?Looking Ahead:

- EPR Rules Vary by State: And they are continuing to evolve. Material lists and rates are still being compiled. Inconsistencies across state programs mean the cost of fees, what materials earn you incentive or disincentive credits, and who is considered The Producer could vary significantly by state. Analyze your distribution to identify the most impacted areas and make decisions accordingly.

- Innovation Is Key: While recycled content is currently costly, EPR policies aim to improve recycling systems, create better recycled material available at a lower cost and create stable markets for more types of recycled materials while eliminating use of virgin or non-recyclable materials.

- Educating Consumers Is Essential: Without proper waste disposal education, even the best-designed packaging won’t achieve its potential. The US currently recycles most materials at a rate barely above single digit. ?It will be a lengthy process to educate consumers on how to dispose of so much new recycled content, and to ramp up infrastructure to meet the goal of true simple curbside recycling for most consumers in the EPR states.

Final Thoughts

Time is of the essence. Start preparing today to reduce future liabilities and embrace sustainable packaging solutions. If you have questions, I’m happy to share what I have learned though participation with the Circular Action Alliance, who manages the Producer Responsibility Organizations, creating the programs with states, and the entire registration and data reporting system for several states. If there were a lot of new concepts in here, or terms that were new to you, contact me here at Linked In or through my email [email protected]. I will send you a brief but more thorough introduction to the current state of EPR and links to relevant governing organizations.

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