The Road to More Effective Extended Producer Responsibility in the U.S.

Long popular in Europe, Extended Producer Responsibility is now gaining ground in the U.S. Over the past two decades, a number of states have enacted more than 80 laws mandating EPR.

Long popular in Europe, Extended Producer Responsibility is now gaining ground in the U.S.. Over the past two decades, a number of states have enacted more than 80 laws mandating EPR, covering products such as batteries and leftover household paint. What can be learned from these programs?

by Jennifer Nash and Christopher Bosso

Extended Producer Responsibility (EPR) is a policy approach which holds product manufacturers ('producers') at least partially responsible for collecting and recycling products that consumers no longer want. In the U.S. many of the first EPR laws enacted were vague, simply requiring manufacturers to set up collection programs but not specifying how they will operate. Recent laws however are more likely to have greater substance, requiring manufacturers to submit detailed program plans to state environmental agencies. Some laws also call on manufacturers to meet specific performance targets and offer financial incentives to consumers to encourage them to bring products back for recycling.

The list of products covered by EPR statutes is also growing. These developments suggest a growing sophistication among states about how to use this approach to achieve policy goals, and a growing awareness among some manufacturers that, if appropriately structured, EPR is an approach they can live with.

Why EPR?

In the U.S., local governments typically shoulder the burden of paying for waste management, including household electronics, batteries, and paints. Because these products contain toxic materials, as well as components that can be recycled, they require special and frequently costly handling.

EPR shifts the costs of managing those products from local and state governments to product manufacturers. Such cost shifting does not just offer relief for strained government budgets. At least in theory, requiring manufacturers to internalise end-of-life management costs creates incentives for them to make and market products that are more durable, more recyclable, less resource-intensive, and less toxic.

For consumers, EPR programs can offer a more convenient way to get rid of products they no longer want, even at the cost of slightly higher product prices. In as much as consumers show a willingness to take advantage of product recycling programs as they become more readily accessible, fewer products containing valuable resources and toxic materials are likely to end up in the household waste stream.

Historically in the U.S., manufacturers have been wary of EPR out of concern that it would increase their costs. Today, business responses to calls for EPR vary from sector to sector and business to business. EPR laws for electronics, for example, can impose different costs on manufacturers depending on whether they make televisions or printers (for which secondary markets are weak or non-existent) or computers (which have higher residual value).

Some manufacturers see programs that encourage consumers to bring back products for recycling as opportunities to strengthen brand loyalty. In other instances, individual companies promote EPR in part to address criticism about their products, such as Nestle's support of EPR for plastic bottles. Some waste management companies, notably Waste Management Incorporated, provide financial support to organisations advancing EPR policies in the expectation that the specialised collection, transportation, sorting, and recycling that suchjerje programs require will generate new business.

Characterising EPR in the U.S

Increasingly manufacturers are recognising EPR's advantages. However, their willingness to create or participate in such programs does not occur in a policy vacuum. Given the absence of a federal framework for EPR on a national level, policies are largely set by the respective states through increasingly rigorous and comprehensive EPR statutes. To give an overview of the general patterns in state EPR policy approaches, we will take a look at four product sectors.

Rechargeable Batteries

Rechargeable batteries contain significant quantities of toxic metals with the potential to contaminate the environment if improperly disposed. To date, nine states have enacted EPR laws for rechargeable batteries, led by Minnesota and New Jersey in 1991 - the first EPR laws in the nation.

The Minnesota and New Jersey laws are relatively detailed and prescriptive. Both ban consumers from disposing rechargeable batteries in household trash and require that manufacturers only market products with rechargeable batteries that are appropriately labelled and easily removed. The Minnesota law goes further, requiring manufacturers to establish a program to recover 90% of nickel-cadmium and small sealed lead acid batteries disposed as waste.

In 1994, in response to laws in Minnesota, New Jersey, and other states, battery manufacturers established the Rechargeable Battery Recycling Corporation (RBRC) and took steps to roll out a nationwide network of collection sites where consumers and businesses could drop off rechargeable batteries at no cost.

However, the Product Stewardship Institute estimates that as of July 2010, RBRC's voluntary programs have collected just 10% to 12% of the rechargeable batteries available for recycling - a rate low by any measure, and of concern given the sheer volume of batteries hitting municipal waste streams. By contrast, in 2010 Minnesota's more rigorous EPR program had collected 2804 pounds (1272 kg) per 100,000 residents - nearly double the national average.

Mercury Thermostats

In the early 1990s, even as Minnesota developed EPR legislation on rechargeable batteries, state environmental protection officials also attended to another source of mercury in the waste stream - mercury thermostats.

Each mercury thermostat contains about 4 grams of mercury, making these products a major potential source of mercury contamination when they come out of service (PSI 2004). In 1992, the state enacted a law prohibiting disposal of thermostats containing mercury in the solid waste stream, placing responsibility for compliance on the contractors who typically remove thermostats when they repair or replace a furnace or air conditioner in the home.

In response to the Minnesota law, and aware of pending actions in other states, in 1998 thermostat producers established the Thermostat Recycling Corporation (TRC). Under this scheme thermostat wholesalers pay TRC a fee (now $25) for a mercury thermostat recycling bin to be kept in their stores and encourage contractors to drop off mercury thermostats removed after installing replacements. Once the bin is full the wholesaler sends it to a designated TRC mercury recycler, which sends the wholesaler a replacement bin.

To date, ten states have enacted EPR laws for mercury thermostats of varying rigor. Pennsylvania and Montana require manufacturers to establish collection programs but do not mandate a collection rate or other performance targets, while Illinois and Rhode Island require manufacturers to collect a designated number of mercury thermostats. Maine and Vermont require manufacturers to pay a $5 bounty to those who bring a mercury thermostat to a collection location. California, Illinois, and Rhode Island require manufacturers to offer an incentive if collection goals are not achieved. So how are these laws working?

Collection rates vary from state to state. Per capita collection rates are highest in Maine and Vermont, which both require manufacturers to offer a financial incentive to anyone who recycles a mercury thermostat. In 2010, the collection rate in Maine was 540 mercury thermostats per 100,000 residents; in Vermont it was 517 per 100,000. Collection rates in Pennsylvania and Montana, states with weaker laws, were 75 and 28 respectively. By comparison, states where only the voluntary TRC program operates collect comparatively few mercury thermostats, which otherwise continue to be disposed in the waste stream.

E-Waste 23 states have laws requiring EPR e-waste electronics, however some do not mandate any particular level of performance

To date, 23 states have enacted laws requiring EPR for waste electronics. Laws in Texas, Missouri, Oklahoma, and Virginia, enacted in 2007 and 2008, do not mandate any particular level of performance, instead simply requiring that manufacturers offer a collection and recycling program for computers.

Collection rates in these states tend to be low, less than one pound per capita on an annual basis. Eight states include performance goals in their EPR statutes and two will set performance goals through regulation.

Laws enacted in Washington (2006), Minnesota (2007), Oregon (2007), and Wisconsin (2009) have to date resulted in the highest collection rates in the country, about six pounds (2.7 kg) per capita in 2010. Washington's e-waste law establishes performance based on convenience; instead of being required to collect a specified amount of products, manufacturers must offer collection services in every county and at least one on-going collection site in every urban area of 10,000 people or more.

Oregon, in addition to requiring the same level of convenience as in neighbouring Washington, called on manufacturers to collect at least 3.3 pounds (1.5 kg) of e-waste per capita in 2009, 5.8 pounds (2.6 kg) per capita in 2010, and 7.1 pounds (3.2 kg) per capita in 2012. Minnesota's law requires manufacturers of televisions and computers to meet relatively ambitious performance goals: in the program's first year they must collect 60% of the weight of the products they sold in the state the previous year, a target that increases to 80% thereafter.

While per capita collections have increased gradually over time in the U.S., overall national collection rates remain low. According to the U.S. EPA, nationwide about 1.4 pounds (635 grams) of electronics were collected for reuse and recycling per capita in 2010, a level about the same as in states with weak EPR laws for e-waste. The remainder was disposed, primarily in landfills designed for MSW.

Paint Recycled paint producted at MetroPaint in Oregon sells for as little as $6 per gallon and has been approved by the Master Painters Institute

Currently seven states have enacted EPR laws for leftover paint in just a four-year time frame. Notably, paint manufacturers have been a driving force behind these laws. Working closely with the Product Stewardship Institute and state and local governments, paint manufacturers represented by the American Coatings Association have introduced EPR bills in state legislatures across the country.

These laws allow paint retailers to charge a 'product stewardship assessment' on each container of paint sold to finance the cost of collecting and recycling leftover paint. Oregon's law, enacted in 2009, requires manufacturers to establish 'convenient' paint collection programs.

Amendments to this law in 2013 include a specific definition of 'convenient:' 95% of the state's residents must live within 15 miles of a permanent paint collection site, such as a retail store. While the Oregon law does not specify a collection rate that paint makers must achieve, it requires them to submit EPR plans to the state that include collection rate goals, and requires them to pay the state $10,000 when they submit the plan and $40,000 annually for program oversight.

In 2010 California enacted an EPR law for paint modelled closely on Oregon's program. The California law requires manufacturers to set goals for reducing, reusing, and recycling leftover paint, include those goals in the plans they submit to the state, and report progress annually.

Elsewhere, Connecticut law incorporates Oregon's requirement that manufacturers establish a 'convenient and available' program, and several additional states are likely to adopt similar paint laws soon.

Conclusion

EPR's promise to save local governments money and remove toxic and potentially valuable products from the waste stream can only be realised if programs capture significant percentages of the products consumers no longer want.

In California retailers not manufacturers are responsible for collecting batteries

Nationally, collection rates remain low, about 10% to 12% for rechargeable batteries, less than 10% for mercury thermostats, and around 15% to 20% for waste electronics. However, these disappointments belie important successes.

For example, EPR programs for mercury thermostats in Maine and Vermont have achieved robust collection rates, as have EPR programs for electronics in Minnesota, Oregon, Washington, and Wisconsin. It is significant that the laws in these states include relatively stringent accountability mechanisms and, in the case of mercury thermostats, performance incentives.

It must be noted that stronger EPR laws tended to be enacted after manufacturer-initiated voluntary programs yielded disappointing results. On their own, such voluntary programs may lack sufficient incentives to induce consumer participation or 'teeth' to ensure retailer and producer compliance.

However, strong laws do not on their own lead to strong performance. Success of EPR relies on the capacity of all policy actors to set high expectations for EPR programs and work together to achieve them.

In this regard, we note that state EPR policies are moving slowly but steadily away from voluntary approaches toward more demanding and specific mandates. The current patchwork of state EPR efforts in no way fully covers the nation or the range of products that consumers purchase and discard.

The critical question now is whether the interests that have achieved some success at the state level will keep up their momentum, and if the more promising state programs highlighted here will ever form the foundation for federal legislation. This will be a requirement for any coherent and effective national EPR framework.

Jennifer Nash is associate director of the Mossavar-Rahmani Center for Business and Government and executive director of the Regulatory Policy Program at Harvard Kennedy School.

Christopher Bosso, Professor, School of Public Policy and Urban  Affairs, Northeastern University.