Making recycling work: EPR laws help support a more sustainable future

Product packaging is an essential component of our increasingly e-commerce driven, fully globalized economy. However, it comes with a downside.

Each year, only about 5 percent to 6 percent of plastic scrap in the United States is recycled. The majority is landfilled, incinerated or leaked into the environment. Even renewably sourced paper, which is an ideal replacement for unnecessary plastic packaging as it is recyclable up to 25 times, is not close to reaching its potential.

Recycling rates for paper are significantly lower than previously reported, resulting in billions of dollars in lost market value and disposal costs each year.

Our recycling system is broken, but new policies in the United States may help fix it.

Recent state laws on recycling, waste reduction

New Jersey’s recycled content law establishes minimum recycled content requirements for certain plastic, glass and paper packaging. Signed in 2022, the law went into effect earlier this year, with increasing demands in the years ahead.

Standards for all regulated containers and packaging products began on January 18. This year, the required minimum recycled content thresholds are:

• 10 percent in rigid plastic containers;
• 15 percent in plastic beverage containers;
• 20 percent in plastic carryout bags;
• 35 percent in glass containers, or 25 percent in containers made from at least half mixed-color cullet; and
• 40 percent in paper carryout bags.

The New Jersey law also bans polystyrene (PS) packing peanuts.

Additionally, bag and packaging bans have been enacted in Colorado, Maryland and Rhode Island. Colorado has banned expanded polystyrene (EPS) takeout containers at most restaurants and schools for ready-to-eat foods. Plastic carryout bags are also banned at places such as large chain grocery stores, convenience stores and retail food establishments. 

Under the 2021 signing of HB21-1162, the Plastic Pollution Reduction Act, most Colorado retail food establishments, such as grocery and convenience stores, are no longer permitted to provide single-use plastic carryout bags to customers. These stores can offer recycled paper carryout bags at a fee of at least 10 cents each. Beginning on April 1 of this year, the law required that 60 percent of those fee revenues be remitted to the municipality or county where an affected store is located.

Additionally, Colorado retail food establishments are now prohibited from distributing ready-to-eat food in EPS containers. The act does not apply to packaging for pharmaceutical drugs, medical devices or dietary supplements.

Rhode Island, several counties in Maryland and the city of Pittsburgh also have enacted single-use plastic bag bans. Rhode Island’s ban went into effect January 1 after numerous communities in the state previously took that step. First introduced in 2013, HB7065 completed the process in 2022 and affects grocery stores, drug stores and other retail businesses. The legislation specifies that the ban does not apply to certain types of plastic bags, such as those used to contain loose produce or for dry cleaning.

Stores can still offer recyclable paper bags, as well as recyclable cardboard boxes and reusable bags. The legislation notes the importance of incentivizing the use of reusable bags, which it defines as a cloth or durable plastic bag with stitched handles designed for at least 125 reuses.

Beginning July 31, Rhode Island also banned intentionally added per- and polyfluoroalkyl substances (PFAS) from food packaging that is made or sold in the state.

EPR laws increase recycling, reduce waste, save money

Nationwide, states are considering extended producer responsibility (EPR) programs and laws that, when properly designed and implemented, have a proven track record of significantly increasing recycling rates, saving municipalities millions of dollars, as well as reducing waste.

Over 40 countries and provinces around the world have tracked more than three decades of success with similar EPR programs, resulting in packaging recycling rates as high as 80 percent.

This year, Minnesota became the fifth U.S. state to approve a law establishing an EPR program for packaging. The defining feature of the law is that it establishes a true shared responsibility regime for recycling costs. Producers must reimburse service providers for the management of covered materials on an incremental basis, commencing with a minimum of 50 percent in 2029 and capping at 90 percent in 2031 and thereafter.

A key point of distinction from most of the other states’ EPR laws is that producers will not be responsible for 100 percent of all costs in Minnesota. Service providers also will be rendered stakeholders as they are required to register with a producer responsibility organization (PRO) and meet the PRO’s performance standards to qualify for reimbursement of covered costs that they incur, as defined under the law.

Service providers will be reimbursed for infrastructure investments based on competitive bids, thus promoting fair competition and—hopefully—savings. The critical role of local governments in the provision of waste management services will also continue in Minnesota.

This partnership with industry means the PRO will comprise packaging producers that have the experience and know-how to effectively develop and manage their stewardship plan. It will be tasked with developing a mechanism and reimbursement model for core recycling functions centered around services at residences, schools, small nonprofits and governmental entities. The law does not set arbitrary recycling targets or mandates on the composition of packaging. Rather, it provides that the PRO and the state will both establish performance targets, including proposed rates of reuse, return, recycling and composting rates, as well as targets for waste reduction and postconsumer recycled content, and the dates by which these targets must be met.

In 2022, California became the fourth U.S. state to enact a comprehensive EPR law. As similar packaging laws come online in Colorado, Oregon and Maine, paper and packaging recycling is expected to increase dramatically.

As state EPR laws are implemented, producers of covered packaged goods will be required to register with a PRO such as the Circular Action Alliance (CAA), report quantities of packaging materials sold in the state and pay fees based on the quantity and type of materials sold. By increasing packaging management costs for producers and modulating these fees according to the materials employed, EPR laws incentivize packaging design changes that minimize environmental impact.

Guidance for businesses

In preparation for EPR compliance, companies should first determine whether they are regulated “producers” selling “covered materials” in a jurisdiction with EPR legislation.

As these definitions vary state by state, this determination will require research and consultation with EPR experts to ensure applicability and compliance. If the answer is yes, the company will need to register with that jurisdiction’s PRO and begin tracking the quantity and types of material sold into the jurisdiction. This registration process is relatively simple, and costs, if any, are nominal.

Companies that produce packaged goods need to carefully assess and manage their compliance obligations—including data gathering, formatting and management—in different states, along with the incurrence of fees based on types and quantities of reported materials. While some PROs may be able to provide guidance as to whether a company qualifies as a covered producer, companies are strongly advised to consult with their own legal and regulatory experts to confirm compliance obligations in each state.

The long term

EPR laws are intended to continue and accelerate a shift to the use of packaging materials that advance the transition to a more circular economy, which minimizes and ultimately eliminates waste.

For too long, technological advancement and productivity have followed the “take-make-waste” model in which natural resources are extracted to manufacture products that are disposed of once their useful life is exhausted. This system is not sustainable in a world with finite resources and scarce viable land. Effectively designed EPR programs will incentivize industry to replace fossil fuel-based materials, such as plastic and extruded PS foam, with fiber, starch and other organic materials.

Industrialists have profited for centuries at taxpayers’ expense, eluding any financial or logistical burden of the impact of their products. Financially distressed municipalities and their constituents have had to literally clean up the mess while corporate profits have soared to record highs. The packaging industry must be incentivized to embrace its environmental stewardship responsibilities. Under EPR, the burden for better design and responsible end-of-life management of packaging and printed paper is transferred from local governments, taxpayers and individual ratepayers to the producers who put them into commerce in the first place.

EPR holds the potential to propel us forward to a circular economy in which waste and pollution are eliminated, materials and products are circulated at their highest value and resources are replenished. As these laws proliferate and become refined, it is our collective job—as policymakers, manufacturers, service providers, lawyers and concerned nongovernmental organizations—to work toward ensuring that they meet this overarching goal of a better and more sustainable future.

James T. Asali is a senior counsel with Chamberlain Hrdlicka in Philadelphia, where he focuses his practice on corporate, transactional and sustainability law. He may be reached at jasali@chamberlainlaw.com.