Minnesota just joined the roster of states with extended producer responsibility (“EPR”) packaging programs, and New York and Illinois are evaluating similar legislation. Meanwhile, states with more established programs are approaching significant milestones. Now more than ever, potential producers should evaluate their obligations in this growing and complicated compliance space.

DIscussion

On May 21, 2024, Minnesota became the fifth state (following Maine, Oregon, Colorado, and California) to enact an EPR packaging program. All of the programs cover packaging but different programs also regulate a varying range of materials, including paper, writing paper, and foodservice ware. Minnesota’s program covers packaging and paper. 

Under these programs, fees are assessed against the producers of covered materials to subsidize the infrastructure required to recycle the materials. Producers must join a producer responsibility organization (“PRO”) or, in some states, satisfy eligibility for individual compliance. The PRO is responsible for administering the program, facilitating compliance, and collecting the fees.  In Minnesota, there is no option for individual compliance.

Each state has its own (and often complex) definition of “producer” for packaging materials – although trademark/brand owners are responsible under some scenarios in all of the programs – with a succession of other parties in the supply chain potentially responsible under various situations, including the importer, distributor, licensee, or the manufacturer.

Minnesota distinguishes between products sold in physical retail establishments in the state versus products sold via e-commerce – and in the case of an e-commerce sale directly to a consumer, the entity that added the packaging for shipping is primarily responsible for that packaging (whatever that party’s position in the supply chain), whereas the brand owner is primarily responsible for packaging where sales occurred in the state at physical retail establishments.

One notable feature of the Minnesota program is that producers are allowed to assign responsibility for compliance to another party by contract. While no other state recognizes a contract as the basis for shifting legal responsibility, Oregon does not require producers of covered materials to register with the PRO if another entity registers as the producer for the same covered materials.[1]

The sale of materials covered by each program is prohibited within the state unless the producer of the regulated materials has joined a PRO (or is eligible to comply on an individual basis) by a specified date (July 1, 2025 for Colorado and Oregon and January 1, 2027 for California).  In Minnesota, the prohibition would take effect January 1, 2029.

Different requirements apply in each state for registering with the state and/or the PRO and/or joining the PRO – and Oregon is proposing a new rule that would impose pre-registration requirements. Circular Action Alliance (“CAA”), the PRO for California, Colorado, and presumably Oregon,[2] expects producers in these programs to register with the PRO by July 1, 2024.  In Minnesota, producers must join a PRO by July 1, 2025.

Fines and penalties under each of the programs vary, with up to $50,000 in civil penalties per day per violation under California’s program. In Minnesota, first violations face penalties up to $25,000 per day, while a third violation could reach up to $100,000 per day.

Conclusion

As impending deadlines for compliance are approaching, potential producers should evaluate their obligations under these programs, assess registration requirements, and begin making plans to prepare for compliance.

[1] EPR Group Consulting Inc. (“EPR Group”) a multidisciplinary consulting firm associated with Environmental General Counsel PC, provides support for all the EPR packaging programs, and recently submitted public comments about both California’s and Colorado’s proposed regulations, advocating for a rule that would allow producers to shift responsibility for compliance by contract. 

[2] Oregon has not yet selected a PRO; however, CAA was the only entity to submit an application to serve as the PRO.