July 01, 2015

The rise of mandatory product stewardship programs

Steven Sarno and Lauren Hopkins

Long after the introduction of “bottle bills” in the 1970s, which created some of the first industry-managed product return programs, many states are revisiting the initial concept and expanding the scope of both voluntary and mandatory product stewardship initiatives. Modern Extended Producer Responsibility (EPR) laws first emerged in Europe with the targeting of packaging, batteries, and electronics and have quickly expanded to other countries. In the United States, over 30 states have enacted EPR laws that firmly place the responsibility for collecting and disposing of unwanted consumer products on the companies that make them. Different states have focused on different products, but the trend is towards rapid expansion resulting in the patchwork of regulation often seen with early-actor, state-based adoption of new regulatory programs.

Early EPR programs

In 1971, Oregon passed the first bottle bill, requiring refundable deposits on certain beverage containers. Ten states followed suit over the next 15 years. Despite attempts by proponents of bottle bill programs to pass legislation in over half of U.S. states (as of March 2015 there were bills pending in Indiana and Maryland), the number of bottle bill states has remained steady. While deposit programs are generally successful in creating a financial incentive to return used products, their isolated, state-specific nature can be a drawback. The lack of uniformity prevents a harmonized response from manufacturers and contributes significantly to the costs of compliance. Moreover, most bottle deposit programs rely on individual beverage distributors and require expensive sorting by brand and distributor.

A notable exception to this is Oregon, the bottle bill pioneer, which in 2011 substantially expanded its bottle deposit law. It switched from a program based on individual beverage distributor/brand responsibility to a collective system run by a private, for-profit administrator: the Oregon Beverage Recycling Cooperative (OBRC). In addition, the expansion included a provision that directed OBRC to establish independent collection centers in order to relieve the burden on grocers and retailers. OBRC essentially acts like a statewide industry consortium of the entities responsible for the creation and the ultimate recycling of the product. Together these changes give more control to the manufacturers while simultaneously expanding manufacturer responsibility.

The development of industry-consortium responses to EPR mandates

The collective, financial responsibility model underlying Oregon’s 2011 bottle bill expansion was not the first of its kind. In the early 1990s, several states adopted EPR laws for certain batteries (primarily the rechargeable kind, and lead-acid). These programs, led by Minnesota and New Jersey, required manufacturers to collect, transport, recycle, or properly dispose of batteries they sold in the state. After several states passed similar EPR laws, in 1994 manufacturers formed the Rechargeable Battery Recycling Corporation (RBRC), now Call2Recycle, Inc., to oversee battery collection and disposal. Despite the formation of this industry consortium clearinghouse, recycling rates for rechargeable batteries remain low (10 to 12 percent on average) in part because the underlying state laws vary widely and many lack specific performance targets and reporting mechanisms.

A similar industry reaction occurred in the early 2000s, following the introduction of EPR programs to address electronic waste (primarily computers and televisions). California instituted an Advanced Recycling Fee (ARF) program in 2003 to fund the reimbursement of collection and recycling costs for covered electronic devices by charging the customer at the point of sale. Maine followed in 2004 with an EPR program that required manufacturers to shoulder the responsibility for managing the collection and recycling process. Twenty-two other states have since followed Maine’s lead.

Although a decade had passed since the first rechargeable battery program, EPR laws for electronic devices again preceded the formation of an industry response. In neither instance was the program driven by a single, industry-led program or model legislation. But that is changing. States have now moved on to other product groups including mercury thermostats (11 states), pesticide containers (CA), pharmaceuticals (three counties), carpets (CA), paints (eight states), and mattresses (three states).

Figure 1: Products subject to state/local EPR laws

Many of these EPR programs take a mandatory, collective-responsibility approach. In some cases (mercury thermostats, paint, and carpet), the EPR mandates were absorbed by a preexisting, voluntary industry consortium. The mercury thermostat EPR programs mirror earlier product programs in their state-to-state variation and corresponding success rates, and the industry consortium functions more as an information clearinghouse. By contrast, the carpet and paint industries took a more active role in establishing a model framework that could be replicated across states as those states adopted EPR requirements. By getting involved early, Carpet America Recovery Effort was initially designated as the sole “carpet stewardship organization” for California and developed the first carpet stewardship plan, which, practically speaking, will set the contours of future plans by individual companies and other stewardship organizations. PaintCare, the paint manufacturer consortium, went one step further by affirmatively advocating for mandatory EPR programs and developing model legislation that could be used by any state seeking to address paint recycling. Most recently, in the case of mattresses, industry groups formed the Mattress Recycling Council, a nonprofit organization intended to plan and operate compliant mattress stewardship programs, at the same time that California, Connecticut, and Rhode Island passed their respective EPR laws.

By getting out in front of state legislatures, manufacturers have been able to offer interested states a uniform, streamlined option for bringing a new product into the EPR fold. This move from reaction to proaction has now come full circle back to the battery industry. In 2014, Vermont passed the first-in-the-nation mandatory EPR program for primary, single-use batteries. Once the law becomes effective in 2016, primary battery producers will not be allowed to sell directly (or through retailers) unless they (by themselves or with others in a stewardship organization) register under an approved and implemented primary battery stewardship plan.

Following the successful enactment of Vermont’s law, the Corporation for Battery Recycling, National Electric Manufacturers Association, Rechargeable Battery Association, and Call2Recycle, Inc., released the Model Consumer Battery Stewardship Act, which will be put forward in Connecticut in 2015. Success in Connecticut may lead to other states following suit using the industry-designed model bill.

It is clear that mandatory EPR laws are here to stay and will likely continue to expand at the state level to include additional categories of products or product packaging. Whether early industry action will continue to be the model for anticipating such future regulation remains to be seen, as does the corresponding success of the EPR effort overall as a mechanism to drive sustainable product design and end-of-life producer responsibility.

Steven Sarno and Lauren Hopkins

Steven Sarno and Lauren Hopkins are attorneys with Beveridge & Diamond in San Francisco, assisting clients with a variety of products regulation matters.