Eco-Modulation in US EPR for Packaging Programs
It’s no secret that extended producer responsibility (EPR) for packaging is set to reshape the US packaging industry, leaving many producers and packaging companies concerned about increased reporting and compliance requirements, fees, and other obligations. However, a key upside of EPR lies in its eco-modulation programs, which incentivize sustainable design practices and the implementation of innovative packaging solutions. In this blog, we will explore the concept of eco-modulation and eco-modulation systems in EPR programs in Oregon, Colorado, Maine, California, and Minnesota.
Five Active EPR for Packaging Programs in the USA
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As the map above indicates, there are currently five active EPR laws in the United States that include packaging and containers in their scope. These states include Maine, California, Oregon, Colorado, and most recently Minnesota. In short, EPR is a regulatory framework that requires packaging producers (and other designated products / materials) within a specific region to take on the financial and logistical responsibilities for managing the waste and environmental impacts their products generate. This is typically achieved by joining and paying fees to a producer responsibility organization (PRO). You can read more about EPR programs in US states and North America (Canada, Costa Rica, and the Dominican Republic) here.
What is Eco-Modulation in EPR?
Many in the packaging industry think of EPR as a regulatory burden with increased compliance costs, reporting requirements, and material-specific fees. But if you are a producer in any of these states, the PROs and state departments have the ability to adjust fees to incentivize packaging producers to minimize waste, impact, and integrate more sustainable materials—a concept known as eco-modulation, or eco-modulated fees.
In other words, firms who use sustainable materials (and high PCR count) and minimize impact starting at the product concept phase will be rewarded with lower fees and other incentives. Eco-modulation encourages producers in a defined territory to enact system change and create more sustainable, recyclable (or compostable) products, instead of merely paying a fee to cover recycling costs and continuing with business as normal. Additionally, just as Oregon’s Department of Environmental Quality explains in their Guidance to Ecomodulate Fees guide:
"Evidence suggests that some recyclable items may be more impactful than non-recyclable alternatives, even when the benefit of recycling is accounted for, and even if recycling is maximized. This is because the environmental impacts of production are often many times larger than the impacts of disposal, and because recycling can never fully mitigate the impacts of production. So when comparing competing materials against each other, variance in upstream impacts between those materials is often a more important factor than recycling, at least for materials that contribute a significant percentage of the overall package."
Currently, all five active EPR for packaging programs have made statements about including eco-modulated fees in their laws. Aside from the five active programs, a number of US states have introduced EPR bills that have not yet passed, and Maryland and Connecticut have passed EPR for packaging study bills including needs assessments and waste infrastructure audits. It is very possible that these programs could include eco-modulated fees as well, especially if the Circular Action Alliance (CAA) has any influence.
Let's explore the eco-modulation and EPR for packaging programs in Oregon, Colorado, Maine, California, and Minnesota in more detail.
Oregon's EPR & Eco-Modulated Fees
Oregon—Plastic Pollution & Recycling Modernization Act (SB 582)
In August 2021, Oregon enacted its EPR program for packaging through the Plastic Pollution and Recycling Modernization Act (SB 582), following Maine’s S2145 by only a few months. Effective as of January 1, 2022, this legislation aims to streamline recycling for consumers, broaden access to recycling services, improve sorting facilities, and generate environmental benefits by mitigating issues like plastic pollution. By 2025, the state anticipates noticeable “recycling program changes,” with program changes starting in July of next year.
A Summary of Producer Obligations & Definitions document provided by the Department of Environmental Quality, includes a breakdown of what is a “covered product” under SB 582, stating:
"The RMA defines three types of covered products in Section 2: packaging, food serviceware, and printing & writing paper. It also defines producer obligations differently for different types of covered products, so it is important to understand what type of covered product(s) your materials are. Specifically, food serviceware is not packaging. Oregon’s law applies to all covered products, regardless of whether they are discarded by households or others (businesses, etc.)."
Funding for these enhancements will be sourced from contributions paid by producers and manufacturers of packaging, paper products, food serviceware, and more. The Recycling Modernization Act fact sheet outlines the implementation schedule for SB 582: By 2024, the program will focus on rulemaking, submission of initial PRO program plans, and several key assessments due throughout the year, including a public procurement review by May 15, an equity study by September 15, and a multi-family services needs assessment by the same date.
The main deadline for 2025 is July 1—when the program officially kicks off—with producers needing to join a PRO, PROs beginning implementation, program changes, and collection lists statewide, etc.
Oregon's Eco-Modulated Fees
Alongside paying PRO fees based on amount and material type entering into Oregon and complying with reporting requirements, Oregon’s Department of Environmental Quality (DEQ) decided to include an eco-modulation system at the discretion of PROs, stating:
"The law also mandates that PRO(s) adjust producer fees to incentivize producer actions to reduce the environmental and human health impacts for covered products, such as changes in design, production, and distribution of products."
In other words, the state of Oregon is leaving it up to PROs to set the criteria, calculations, and system of adjusting and lowering fees to encourage sustainable packaging and product design that lessens the burden on MRFs and Oregon’s waste management system.
Part of Oregon’s inclusion of eco-modulation in their EPR program is the understanding that system change and holistic product design changes are needed to meet greenhouse gas emission (GHG) and impact reduction goals for the packaging industry both statewide and nationally. To Oregon’s DEQ, recycling and carbon offsets are not moving the needle enough; they see a need to catalyze system change through the adjustment of EPR fees for producers who work to design out waste at the product stage.
Oregon’s DEQ states:
"System change is needed quickly from many industries to reverse this situation, including from the packaging and consumer goods industries. For the packaging sector, recycling alone is insufficient to deliver the needed magnitude of change. Even if recycling was conducted flawlessly throughout the nation, it could only deliver 31% of the needed 90% greenhouse gas reduction from that sector."
The DEQ also includes a handful of strategies to “reduce impacts of packaging,” including:
Shifting to green energy production and reuse / closed-loop systems
Minimizing material and right-sizing packaging
Prioritizing design changes that reduce eco-toxicity and externalities into the environment
As we highlighted above, Oregon allows individual PROs to calculate and design eco-modulation formulas, but offers 3 points of guidance:
Incorporate DEQ’s rules for life cycle evaluation
Grant, at a minimum, as many malus fees (penalties) as bonus fees
Increase the magnitude of fee adjustments over time to maximize effect
Oregon’s DEQ provides a great example of what qualifies for eco-modulation incentives and what doesn’t, stating:
"Where the design of products for recyclability does coincide with reduction of environmental impact, eco-modulation should encourage these designs. This could be the case with small changes to packaging that improve sortability and processing. For example, consider the approach of replacing non-water-soluble labels with water-soluble labels. Even if the water-soluble labels are more impactful to produce, their relative weight compared with the entire package is typically minor. By contrast, one could imagine a shift from a non-recyclable material to a much heavier, recyclable one that would greatly increase impacts—putting all potato chips in glass containers, for example. Eco-modulation should not reward such a shift."
To end the guide, DEQ makes a powerful statement that solidifies the philosophy around the inclusion of eco-modulated fees in EPR programs:
"DEQ expects PROs to propose fee adjustments that are likely to reduce actual impacts, as opposed to merely advancing popular packaging attributes."
As Oregon’s EPR program begins solidifying PROs and fees, drawing closer to the July 1, 2025 deadline, we will track how eco-modulation systems develop and how they vary by PRO.
Read more on Oregon’s eco-modulation system for EPR here.
Colorado's EPR & Eco-Modulated Fees
Colorado—Producer Responsibility Program for Statewide Recycling Act (HB 22-1355)
Colorado introduced its EPR legislation for packaging, the Producer Responsibility Program for Statewide Recycling Act (House Bill 22-1355), on June 3, 2022. This law creates a system where “companies that sell products in packaging and paper products” contribute financially to a statewide recycling initiative to handle specific materials.
According to a summary of the bill provided by the Colorado General Assembly, the covered materials include “packaging materials and paper products.”
The Colorado Department of Public Health & Environment expands upon what falls under covered materials in an FAQ they posted in August of 2024:
"Covered materials include consumer-facing packaging materials and paper products. It includes packaging made of any material, regardless of recyclability, that is intended for single or short-term use and is used for the containment, protection, handling, or delivery of products to the consumer at the point of sale, including through an internet transaction. It also includes products supplied to or purchased by consumers for the express purpose of facilitating food or beverage consumption and that are: (a) ordinarily disposed of after a single or short-term use; and (b) not designed for reuse or refill. Packaging material includes paper, plastic, glass, metal, cartons, flexible foam, rigid packaging, or other materials or combination of these materials."
To see how robust and complicated covered materials become in regards to EPR for packaging programs, check out our blog post, EPR for Packaging in Canada.
In May 2023, Colorado selected the CAA as its designated PRO. CAA then brought in HDR Engineering, Inc. to conduct a needs assessment focused on evaluating Colorado’s recycling infrastructure, service capabilities, and costs. Additionally, HDR was tasked with identifying materials accepted by all recycling facilities and setting recycling rate and collection benchmarks, with their assessment completed by July 31, 2023.
According to the timeline from the Colorado Department of Public Health & Environment, in the first quarter of 2024, the needs assessment findings were reviewed, stakeholder meetings on foundational regulations were conducted, and preliminary regulation briefings began. The second quarter of 2024 is set for the development of the PRO’s program plan (extending through the fourth quarter), alongside rulemaking hearings on primary regulations.
The timeline also provides insight into the states plans to include eco-modulated fees and systems into their EPR program, which we will explore in the next section.
Colorado's Eco-Modulated Fees
Similar to Oregon’s EPR program, the state of Colorado is planning on including an eco-modulation system in their EPR for packaging program to encourage system change and the use of more sustainable packaging materials and design formats.
In the words of Colorado government,
"In addition to expanding recycling access, producers will pay a fee determined by a product’s design. Known as eco-modulation, this approach encourages producers to create products that will: reduce the amount of packaging materials, enhance the recyclability or value of the materials, use high levels of post consumer recycled material, and make it possible to reuse and refill containers."
The implementation timeline indicates that Eco-Modulation Rule Drafting and Stakeholder meetings will be conducted by the Department of Public Health & Environment from Q1 to Q2 2025, this process will take place alongside a Rule Drafting stage that will take place in Q1.
In Q3 of 2025, we should expect more information about eco-modulation rules in a planned Eco-Modulation Rule Briefing, which will be followed by an Eco-Modulation Rulemaking Hearing in Q4 of 2025. The Colorado Department of Public Health & Environment plans to make eco-modulation rules effective on January 1, 2026, alongside making producers “pay dues” to their PRO and kicking off the Plan Implementation.
It is important to note that the CDPHE claims this timeline is subject to change; you can stay up to date on the development of CO’s EPR program and eco-modulation system here.
Maine's EPR & Eco-Modulated Fees
Maine became the first state in the US to implement an EPR law for packaging with the passage of its Stewardship Program for Packaging (S2145) in July 2021. The law aims to reduce packaging waste, lower toxicity, and boost recyclability, as outlined by Maine’s Department of Environmental Protection.
The program requires producers to contribute funds through a stewardship organization (SO), which will reimburse municipal recycling costs, enhance recycling infrastructure, and educate residents on effective recycling practices. An RFP to select the SO is scheduled for September 2025; the implementation timeline projects the program’s operational launch by 2027.
Under the law, “packaging material” includes any material used to contain, protect, or present a product at the point of sale. A “producer” is generally defined as the brand owner or primary importer of packaged products into Maine.
The program's exemptions cover certain producers, such as those with annual revenues below $2 million, those selling less than 1 ton of packaging in Maine, or producers generating more than half of their revenue from salvaged goods.
Maine's Eco-Modulated Fees
Like Oregon and Colorado’s EPR programs, the state of Maine is planning on incorporating an eco-modulated fee structure to its S2145. Similar to the other programs, Maine’s is still underdevelopment and the Department of Environmental Protection has not selected an SO yet; once selected, we should expect more development around eco-modulated fees.
Maine’s plans for eco-modulated fees are laid out in Section 13 of the legislation, claiming they will work to reduce fees for producers who create packaging solutions that:
Use recycled content in and increase the recyclability of the material
Lower toxicity
Reduce the total amount of material used (right-sizing)
Reduce litter and externalities from packaging material
Increase reuse of materials
Include labeling to “reduce consumer confusion” and encourage recycling
Use recycled content in and increase the recyclability of the material
Without explicitly stating so, Maine’s eco-modulated fees work to incentivize more sustainable design at the packaging design stage, promoting systems change like that of Oregon and Colorado. With the appointment of an SO planned for April of 2026, we should expect more information on how eco-modulation will then work in Maine.
California's EPR & Eco-Modulated Fees
In June 2022, California introduced an EPR program for packaging with the signing of the Plastic Pollution Prevention and Packaging Producer Responsibility Act (SB 54) by Governor Newsom. The law aims to reduce packaging waste and increase recycling to support California’s environmental goals, with three major targets for 2032:
Ensure 100% of single-use plastic packaging and foodware is recyclable or compostable
Achieve a 65% recycling rate for single-use plastic packaging and foodware
Reduce single-use plastic packaging and foodware use by 25%
Key developments in SB 54's implementation include CalRecycle’s January 2024 appointment of the CAA as the program's PRO. The CAA also serves as Colorado’s PRO, is set to apply for Oregon, and may act as Maryland’s PRO if its EPR law passes. The CAA is helping to establish SB 54 by supporting rulemaking, building local partnerships, and expanding capacity. Learn more about CAA here.
On July 1, 2024, CalRecycle published a Covered Material Categories List under SB 54, including glass, ceramic, metal, paper and fiber, plastic, wood, and organic materials, with further classifications for specific items like foams and dunnage. CalRecycle estimates that around 13,615 producers will participate in SB 54, compared to roughly 1,000 in other state EPR programs. These producers are expected to contribute $5 billion over ten years, starting with annual payments of $500 million in 2027.
California's Eco-Modulated Fees
With the CAA being appointed as California’s sole PRO, we should expect an eco-modulated fees program similar to Colorado. The regulations are planned to be “promulgated” by January 1, 2025—we should expect more info on California’s plans for eco-modulation then. You can see the full implementation timeline here.
What we currently know about SB 54’s plans for eco-modulated fees comes from the available legislation, which states:
"The fee required pursuant to subdivision (a) shall be adjusted using malus fees or credits for participant producers. . ."
The legislation goes on to state that adjustments on fees will be based on the following factors:
The percentage of postconsumer recycled content in the participant producer’s covered materials (validated by a third party and as long as recycled content does not disrupt potential for future recycling)
Source reduction related to right-sizing and optimization to reduce packaging material
“Standardization of packaging materials” that simplifies the activities like processing, marketing, recycling, composting, etc.
Malus fees for presence of hazardous materials—to be identified by a Hazard Assessment by the Office of Environmental Health & the Department of Toxic Substances Control
Actions taken by the producer to “improve consumer behavior related to sorting and proper disposal” including clear labeling information about disposal
Reduced fees for “plastic covered materials derived from renewable materials” as compared to nonrenewable materials
Reduced fees for “certified compostable covered materials” (that do not contain toxic additives)—determined by the PRO
Increased fees for covered materials that contain “toxic heavy metals, pathogens, or additives”
As you can see, the approach for eco-modulated fees laid out by SB 54 is currently robust, with both the PRO and CalRecycle themselves setting the foundation for when fees will be reduced and increased based on producer activity. With California being the fifth largest economy in the world and SB 54 projected to cover 13,615 producers, it will be interesting to track how eco-modulation is implemented into California’s EPR for packaging program.
Minnesota's EPR & Eco-Modulated Fees
Minnesota became the latest state to pass an EPR law that includes packaging in its scope in May of this year with Governor Tim Walz signing HF 3911 into state law. The bill, titled the Packaging Waste and Cost Reduction Act, states its main purpose as:
“Reduce the environmental and human health impacts of these materials and benefit all Minnesotans with:
Less packaging overall and toxicity reduction
More packaging that is refillable, reusable, recyclable, and compostable
More curbside collection and places to recycle and compost
Reduced costs with producers reimbursing at least 90% of the costs related to refill, reuse, recycling, and composting
Expanded infrastructure jobs
Investment in public education and clear standards”
Aside from these goals, the program also aims to have all packaging, food packaging, and paper products either refillable, reusable, recyclable, or compostable by the year 2032. The program will be managed by the Minnesota Pollution Control Agency, an Advisory Board, and a PRO that the MPCA will appoint by January 1, 2025.
Materials covered by HF 3911 include, “packaging and packaging components, food packaging, and paper products sold, offered for sale, distributed, or used to ship a product within or into Minnesota, including online purchases and shipments.” The resource further defines packaging, food packaging, and paper products, stating:
Packaging: materials to transport, market, protect, and handle a product
Food Packaging: materials to market, protect, handle, deliver, serve, contain, or store food and beverages
Paper Products: products made from wood or cellulosic fibers
In defining “producers,” the program page states that producers “generally include product brand owners, manufacturers, or importers.”
The timeline for implementing HF 3911 shows that the state will designate a PRO and advisory board by early 2025. Identified producers will need to register with the PRO by mid-2026. Additionally, a needs assessment is due for completion by late 2028, with a final milestone in early 2031, when producers must cover 90% of net recycling costs.
It is interesting to note that Minnesota’s EPR for packaging program only requires producers to cover 90% of costs by 2031, making it the only active EPR program in the US that does not require producers to fund 100% of associated costs to recycling and other EPR expenditures.
Minnesota's Eco-Modulated Fees
Like all other active EPR for packaging laws in the US, Minnesota’s HF 3911 makes clear mention of plans to include eco-modulated fees to incentivize sustainable decisions at the design stage.
The program page highlights that, “Producer fees must incentivize using materials and design attributes that reduce the environmental and human health impacts of materials.” This will be accomplished through practices like:
Eliminating toxic substances (intentionally added)
Reducing the amount of paper used to create individual paper products and packaging
Increasing the amount of materials managed in reuse / closed loop systems
Increasing the amount of postconsumer material used in designs
Enhancing the recyclability or compostability of the packaging
Increasing the amount of materials derived from renewable and “sustainable sources”
As we mentioned above, the timeline indicates that a PRO will be appointed by January 1, 2025. With this appointment, we should get more insight into how Minnesota’s eco-modulated fees will come to fruition. We will be following these developments closely.
Read more about EPR for Packaging Programs
If you’re looking to dive deeper into EPR programs for packaging, explore our range of EPR-focused content, including:
Staying ahead of new EPR laws begins with a thorough understanding of your packaging’s sustainability impact and expertise in conducting life cycle assessments. With all current US EPR for packaging programs, including eco-modulation programs that incentivize sustainable packaging design, conducting life cycle assessments can help you map your product / packaging system and value chain, understand your impact hotpots, and optimize design for reduced impact at the concept phase. Read more about how performing LCAs can help aid in EPR for packaging compliance here.
Our self-paced, fully online Certificate of Sustainable Packaging (CSP) can help you gain these essential skills—learn more here.
Read more about eco-modulation in EPR programs in the EU in this guide by compliance experts at the Reverse Logistics Group.
