Dietary supplement companies should take note of a growing trend in state law that will affect their business operations and, potentially, their bottom lines.
As of February, 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 “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.
What businesses are affected by EPR and what is required?
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.
While brand owners are generally designated as the responsible “producers” for EPR compliance purposes, importers, manufacturers, distributors and retailers may also be implicated.
Colorado exempts dietary supplement packaging from its EPR program, but most states include it within the scope of EPR laws.
Although state law can vary, EPR compliance generally involves four primary obligations:
Joining an approved Producer Responsibility Organization (PRO), which are nonprofits entities that assist in managing compliance for their member companies and collect fees, submit stewardship plans to state agencies and fund recycling infrastructure.
Collecting and reporting specific data, at least annually, about the packaging materials introduced into state distribution, which provides the basis for fee calculations, recycling targets and program performance metrics (e.g., material composition, weight of each packaging component, packaging format, sales volume, recyclability status, post-consumer recycled (PCR) content).
Paying fees to the PRO based on the type, weight, and recyclability of packaging they place on the market, which are intended to cover the costs of collection, sorting, processing, infrastructure upgrades, and consumer education, relieving local governments of these expenses; and
Meeting design and performance standards, as EPR laws are also intended to encourage packaging that complies with recyclability and content standards. For example, requiring 100% recyclable or compostable packaging at a future date and minimum recycled content targets for certain materials or prohibitions on the use of specific materials in packaging.
Importantly, states have granted environmental agencies broad enforcement authority to impose monetary penalties for noncompliance, which vary by jurisdiction. For example, California imposes penalties of up to $50,000 per day for failing to register, report or pay fees, while Minnesota and Oregon impose penalties of up to $25,000 per violation. In addition to monetary penalties, noncompliance can result in market access restrictions, public notifications and potential civil enforcement actions.
How to prepare for EPR compliance
Given the complexity and rapid evolution of EPR requirements, early and strategic preparation is essential to avoid penalties, reduce fees and potentially turn regulatory obligations into a competitive advantage over noncompliant competitors.
Here are some specific steps you can take:
Assess how EPR compliance may affect your business operations by 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 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.
Ensure there is a system in place to track where the 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.
Finally, keep in mind that, 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 to reduce its EPR fee burden. This could 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 PCR content, reducing packaging weight and phasing out the use of hard-to-recycle formats (e.g., black plastic, PVC, multi-layer films with barriers) and certain additives (e.g., PFAS).
Amin Wasserman Gurnani takeaways
State Extended Producer Responsibility requirements will significantly affect how dietary supplement companies manage packaging and packaging waste. With seven states already implementing EPR requirements and more on the horizon, companies should not delay in assessing their obligations, building data systems, registering with PROs and beginning to redesign 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.
