Legislators in Oregon hammered out an Extended Producer Responsibility (EPR) bill this spring, expecting to sign into law a measure that puts much of the responsibility for handling waste on the companies that make products.
The initial bill, which was more than 90 pages, was complex and had been in the works for years, with 2021 being the turning point for getting something through the legislature. FPA’s lobbyists who follow state legislatures say that the measure should be a head’s up to companies nationwide, with about 10 other states considering their own bills.
“Broad brush, it invests a lot of the decision making in a process that’s run by the state,” says Andy Hackman, a lobbyist with the Washington, D.C., office of Serlin Haley. That situation is a concern because the administration of the details would primarily be with people who are not in the packaging industry, says Hackman and Lauren Aguilar, a Serlin Haley lobbyist based in Sacramento, California. Aguilar closely monitors legislation in the West, and they both are lobbyists for the Flexible Packaging Association.
Fees Are a Concern
Aguilar points out that Oregon’s Environmental Quality Commission is within the Department of Environmental Quality (DEQ), and the commission is the main rulemaker that will be overseeing the entire process. The new law calls for a number of fees, including one proposal that the commission would adopt for “contamination management” and that would be paid by producer responsibility organizations (PROs). PROs are third-party groups that facilitate the responsibility of producers to handle their waste, primarily by assessing fees on the producers. The initial bill in Oregon called for several separate fees on top of the base fee that the PRO would establish within its membership, Aguilar says.
“The DEQ is being very prescriptive on other fees that would have to be paid for on top of whatever base fee the PRO charges, so it would be a very expensive program,” Aguilar says. The bill had not been signed into law at press time, but an example of another fee was a littering abatement fee that would need to bring in at least $10 million annually, she added. “The fees and the fee structure are a huge part of the expense.”
The move toward fees on packaging in the United States is only expected to accelerate. In Europe, fees on producers have become standard, and Hackman expects that states will increasingly be willing to pass costs to producers of all packaging, rather than consumers or end-users.
“The fees on producers are easier to assign, versus things like a deposit program, where the money is coming out of the consumers’ pockets,” he says. “The U.S. has had challenges adopting consumer facing fees. But it’s a lot easier to sometimes say ‘these are big companies, and they’re already doing this in Canada and Europe, and we should do the same.’”
Companies Must Be Involved
No matter where they operate, companies involved in the flexible packaging industry will need to monitor the states where they do business to try to ensure that any fees at least go toward initiatives that would help circularity in the industry.
“There needs to be some thought about—within the structure of the PRO—how the flexible packaging industry makes sure that money in the future might flow to infrastructure that supports collection and recycling of their material,” Hackman says. “There is some potential to create these programs without the infrastructure creation that benefits flexibles, and a significant percentage of flexibles are not being recycled now and can’t be.”
Hackman warns that initial monetary contributors to PROs might focus on just funding infrastructure for those materials that are currently recyclable, such as cardboard, some plastics, cans, and glass.
“There may be a need for the flexible packaging industry to get actively involved with the PROs that are created,” he says. “There could be a disconnect, if there’s not more active, proactive thinking around that topic.”
Probably the biggest takeaway from the lessons being learned from the various state actions is that industry leaders must be involved in the conversations, Hackman and Aguilar stress.
“A big thing for FPA is making sure that the funding is going to build up infrastructure for flexible packaging’s goals,” Aguilar says. “Make sure that the materials that are paying for it are actually getting recycled.”
Aguilar says that several overarching lessons can be learned from the various efforts in Oregon. One is making sure that the definitions are clear because the way one entity defines terms might be different than another, such as what constitutes a “producer,” she says.
Another example became the definition of “contaminant,” especially since fees could be assessed based on that definition. As the Oregon bill was being debated, one definition was anything that wasn’t recyclable. A broad definition like that would capture all flexible packaging unless the recycling system was upgraded to include flexibles, Aguilar notes.
As the final bill in Oregon was being debated, some aspects were catching the packaging industry’s attention and had players actively anticipating possible lawsuits if amendments weren’t made, Hackman says.
For example, it would be impossible for the producer of a package to ensure that the materials are actually recyclable, especially if producers are not granted the authority to help determine what is recyclable, Hackman says. Such measures could be a restraint on commerce.
And depending on how PROs are structured, there could be antitrust issues. “In order to allow this system to be created, we could get into some issues of creating a monopoly,” he says. “It runs against the face of competition if you say producers have to, in essence, contract with one entity to do something.”
Hackman says that New York and Maine also were poised to pass their own measures this year, with other states close behind. (Hackman writes a column for FlexPack VOICE®, and his latest column that gives a roundup of the status of bills in several states appears in the July/August issue that can be found online.)
“New York is going down a much different path than Oregon. I wouldn’t say it would necessarily be better, but I think it is maybe slightly preferable,” he says. That primarily is because New York is giving more authority to the PROs. However, New York also was calling for producers to pay for curbside collection.
Hackman says that the state-by-state process will continue because, while there is interest in federal recycling legislation, national rules are much farther behind. A number of federal measures have been discussed for years—and, currently, Congress has been debating the more than $2 trillion infrastructure bill—but there hasn’t been the consensus to pass anything that would mitigate the states’ appetites for moving on their own.
“I would not expect any state to take its foot off the gas this year,” Hackman says.
Industry representatives have been pushing for uniformity on the national level, with various groups, including the Recycling Leadership Council, lobbying legislators to bring a national playing field into focus. Alison Keane, FPA president and CEO, is a member of the council and maintains that federal rules and guidelines are critical because a state-by-state approach will lead to further fracturing of an already fractured system. (An article on the Recycling Leadership Council also can be seen in the July/August issue of FlexPack VOICE®.) State-by-state approaches will make it difficult if not impossible for national brands as they do not cater their packaging to individual states, she and others say.
In addition to the proposed federal infrastructure program, Hackman points out that other initiatives have been considered in recent years on the federal level, including the Realizing the Economic Opportunities and Values of Expanding Recycling Act (RECOVER Act). It would provide grants to local governments in states to improve and create recycling infrastructure.
“That could become part of any overarching infrastructure program that is being pushed by the Biden Administration,” Hackman says. Even then, he suggests, most efforts will be driven on the local and state levels, with states still having to compete for funding through grant proposals.
There also is the Break Free from Plastic Pollution Act of 2021, which Hackman says will get a lot of attention this year. “I think there is going to be some significant interest in the House elements of it, but it’s still a pretty expansive bill,” Hackman says. He adds that other proposals are being considered, as well.
“There’s going to be a debate, regardless of the vehicle,” he says.
He doubts that EPR rules would be developed on a national level, partly because each state organizes its solid waste differently, “unless there’s significant consensus and industry support around it with the environmental community.”
“That being said,” he adds, “there certainly could become more interest this year in having some uniformity, so I won’t close it off.”
Thomas A. Barstow is the senior editor of FlexPack VOICE®.