EPR Laws Are Spreading So Here Is How To Prepare

Make It Make Sense Opener

Look, I have the best opening line from when we spoke in February, and it's make it make sense. Love it. Make it because like I think this is something that you said. I don't know if you said it in Kylie in the car. EPR in the car. EPR in the car. Like make it make sense. Make it make sense. All right. So let's do it. Welcome to Auto Care on Air, a candid podcast for a curious industry. I'm Stacy Miller, Vice President of Communications at the Auto Care Association, and this is Traction Control, where we chat about recent news from the global to the local level and what it may mean to the industry featuring guests on the front lines. Let's roll. Welcome to the studio, Kylie Boltikoff. Kylie is the founder and principal of Boltikoff Advisory Group specializing in EPR, the hot term of the aftermarket right now. Welcome, Kylie. Thank you so much, Stacey. I'm so happy to be here. Thrilled. Um, I first learned about you doing EPR in the car on LinkedIn, which is a really cool series where you're kind of making it make sense and distilling some of the most um kind of dense information about EPR guidelines and regulations. And I just thought you did a really good job.

So thank you so much.

Yeah, I figured it would be a great opportunity to bring you on and make it make sense to our listeners. Um,

What EPR Really Means

so let's start by giving everybody a quick refresher on like what EPR is and why it's becoming such a big deal.

Yeah, of course. So EPR stands for extended producer responsibility, which basically just means that um states rolling out EPR laws, typically like what um the taxpayers would cover in those packaging fees, um, municipalities are now shifting that cost from the taxpayers back onto the producers of that packaging for the end of life of that packaging.

Right. So all of these different um manufacturers, retailers, distributors, all of that packaging that they're shipping to their customers has to be recycled or disposed of in a really specific way in order for them to avoid some sort of penalty, right?

So how EPR works, right? Um it's just certain states doing it and ultimately it's just because recycling has gotten so expensive and they're tired of like they're tired of landfill, like landfill c um costing less than it does to recycle, right? So these states know that if they're able to shift those costs back on to the producer of the packaging, they might actually be able to recycle that packaging. So um it's also it's also incentive for producers and brandowners to start thinking of how they can design more eco-friendly and sustainable packaging. Because long term, right? Like I can just to like let's throw California in the mix, right? So if you're looking at states like Oregon and Colorado, um, their main focus is going to be recycling, whereas California, for example, is actually complete like like single-use plastic reduction. So it kind of just varies by state and their EPR laws, like what they're really wanting to get out of that program.

States, Deadlines, And PRO Basics

And so you mentioned a couple of states, you said California, Oregon, um, Colorado. Are those the main ones that have implemented EPR rules right now? Stacey.

So to be transparent, there's oh my goodness, there is at least seven, and there are at least seven states. And while there are not like active reporting yet, there are active bills being passed so that you know, in the next few years, like those states will require EPR reporting. But right now, um, the states with active reporting deadlines are Oregon, Colorado, California, and Maine is trying to jump in the mix. So technically they want producers to also report by the end of this May. But I know um the PRO or pro is still working it out with the state to see if they can um if they can make that happen or not. So producers um have to report by the end of May or if that's gonna be a later date. But it's definitely something to look out for.

And explain to our audience what a pro is for those who aren't sure.

Yeah, of course. So a pro is basically just to put it in simple terms, right? It's basically the middleman between the producer and the state. Um, typically they'll throw in the bid to be um a state approved program and then they'll middleman it so producers can go to them, right? And they'll like a producer will register with that pro and then they'll report to that pro and then they'll pay like recycling fines for that pro because then that pro typically is the one who um, well, first of all, takes care of the recycling program for the state, but also does all of that on the producer's behalf to just make it a little bit more simple.

Okay. Yeah. I kind of it makes me think of like a property manager for a building or something. It's like, okay, maybe I don't want to be the landlord, but I'll have someone else do it so they can handle all the repairs and the maintenance is kind of like what kind of what I liken it to. I don't know if that's accurate or not. I feel like it's really fair. Like that's a great way to describe it. Great. Yeah. It's um because there seem to be a lot of different players in here, right? When you say producer, we're really talking about the company that's making and distributing the products or even selling the products, right?

In some cases. So it's so it's such a fun thing to talk about because the definition of producer honestly um is defined differently for every single state with EPR laws. But I would say like the the main definition, probably the one you could count on, is that most likely if your brand is on the packaging, you're most likely going to be um obligated to report.

That's a much simpler, yeah, much simpler way of thinking about it. Thank you. So um, some of the states that we mentioned, California, Oregon, Colorado, those are mostly out west. You mentioned Maine is coming up. So there's something happening in Maine as well. I mean, are there East Coast states following suit? Like, is there any pattern as to how states are adopting or not really?

Um, as far as patterns, I don't know if I could be super helpful with that one if I'm being totally transparent. But I can tell you that Minnesota and Washington are right around the corner. Um and I believe New Jersey, New York, Illinois, and Rhode Island are all trying to actively get bills passed, but I have no idea when their registration or reporting will look like. Just because, again, like I believe that those were just um pushed into existence. But yeah, states to definitely look out for that I think will I think will have active reporting deadlines next year could potentially be Washington, Minnesota, and even Maryland.

Oh wow. Yeah. That's our home state at Autocare. So we'll be obviously watching that very closely. Um when it comes to some of the first couple of states that put it out, um, California, Oregon, Colorado. That's they're so easy to remember the more that you talk about them. Are the other states um are they following suit in terms of how California is?

That would be nice, wouldn't it?

What why not?

Yeah, because um, because it's not like a federally passed law, each state has the independence to make the program what they want it to be. So um, like I can tell you, like I said, California is totally focused on plastic reduction, whereas I believe Oregon and Colorado, they're just kind of focused on making sure things are getting recycled properly. Um and as far as the upcoming, like, excuse me, as far as the upcoming programs, I'm not entirely sure just because um we don't have active regulations from them yet. So uh if people want to watch EPR in the car with Kylie, I'd be happy to let them know as these laws continue to roll out.

Why The Patchwork Hurts Companies

So it's a it's a patchwork of regulations. There's no real standardization. There's not. So that seems to be a pretty big issue for the aftermarket, especially if you're um producing in multiple stage, which many of our companies are, right? That's just wild. I know um we just talked to Donovan Ringo, he's our head of state affairs and grassroots. Um, and then Grant McIntyre, he's our new head of regulatory affairs. We have a lot to talk about, but it sounds like there's some task forces being spun up. We're trying to figure out, you know, how to make this a federal solution um to make it less of a burden on some of these companies, right?

Yeah, I mean, I can tell you that my like my reason for why I do what I do is because, first of all, I love our industry. It just serves me and I want to serve it right back. But um yeah, obviously extended producer responsibility laws were not made with our industry in mind. And there's a lot of people who do EPR, but not a lot of people specialize in the aftermarket and can tie those things together in a way that's beneficial and like truly serves the aftermarket. So that is what I'm trying to do, and especially just doing my best to bring awareness because I know it's complicated, especially with it not being um aligned federally and having to figure it out state by state. It's such a pain with everything else going on. Truly, it's not fun. But um what I can tell companies who are struggling with it is if you have one person on your sustainability team who could use Google Track on updates, like I can personally tell you that is one of my secrets to make sure that I'm always cut up on all things EPR. And sometimes it's just in your best interest to go straight to I can tell you it's Circular Action Alliance. They're the pro for a majority of these states, and they typically are pretty updated on their website. So if you're ever wondering like what states are coming next or what regulations look like for you and your company, definitely check them out. As well as I can tell you um Interchange 360, who was previously known as LPMA, they're an approved independent program plan for the state of Colorado because they actually handle um like lubricants waste for the automotive, like they're specific um to the automotive aftermarket. Like they handle like oil cans and anti-freeze containers and even aerosol, like great cleaner. So definitely if you are obligated in the state of Colorado or you think you might be, that's also an excellent website to check out. Excellent.

Packaging Data And Reporting Workflow

Yeah. That's really good advice. I think there's a lot of confusion also around reporting. So again, I'm sure it's very different across the states, but what you have to report and how to gather that. Can you summary? Is there a way to summarize kind of some of those key things?

Do my best for you. Um, I think the hardest thing for our industry is getting the packaging data that's needed. I know um a lot of that doesn't typically live with the manufacturer, it lives in the supply chain. Um, so typically, like Skew Base is awesome and that's a great place to start. Um, get your sales data into that state and figure out uh figure out what you sold and like what kind of packaging would would be a part of like a part of what you sold into that state. That is the biggest thing because you need the weight of that packaging, you need the materials and you need the sales. And that is a great place to start if you can start getting that packaging data.

And then are there any best practices that you would give companies for the reporting? Like, is it an Excel spreadsheet? I don't know if there's some sort of software out there that exists, probably not yet. That might be an opportunity.

I have always recommended to start with an Excel spreadsheet. Call it your internal compliance platform, right? And start building out your spreadsheets for EPR and label it by state, like the data, the packaging. Um and yeah, down the line, I think it would be really great to see something like that as a platform. But right now, this is a really good place to start, especially for companies who are just trying to get a hold of it.

We had had a we'd had a conversation before, and I remembered being floored to learn that um in your past life you had even gone out to companies and helped them weigh the cardboard boxes down to the grams so they knew how much they're recycling, right? So that's a consideration for some of these companies.

And if they want to do that, again, great place to start because really the best thing that you can have if you're audited is like physical evidence that you have done everything that you can to make sure you're getting them correct data right now. I mean, programs aren't programs aren't all the way matured yet, right? So they really just want to see that you're doing the best that you can with what you have. And there's no better way than to if you have access to your warehouse and you know what packaging your products are going out in, go do what you can to measure and weigh out that product packaging because it's gonna be so much better than guesstimating in the beginning. And also that's gonna be solid data for you to put in your internal compliance platform. Right.

Because this isn't going away. So it's either you do it now or you're gonna get fined and it's gonna get worse, right?

I mean, they're I mean, Colorado, California, and Oregon are already like they've already actively stated um those who aren't compliant are, you know, subject to fees of $25,000 to $50,000 a day. Personally, while I haven't seen that yet, I do know um I have seen some companies with stop sale orders into the state. So it's just something to consider again. I know it's so overwhelming with everything that is going on right now, but it's good to get ahead of it now because you don't want to deal with this later when programs are mature and they're ready to, they're ready to find you and give you stop sale orders. Right. Yeah.

And there are some, there's some pretty critical deadlines coming up this summer. I mean this month, right? Yeah, this month, this summer.

Oh, yeah.

May Deadlines And Real Penalties

It's it's just this month. Okay. We're talking about May. Yeah. Mm-hmm. Yep. Colorado, California, Oregon, and potentially Maine. We're still waiting on that. I think it's gonna happen though. And then California as well, they don't want just your reporting this May. Um first of all, their regulations were officially finalized May 1st. So anyone um who did and didn't do their California reporting last year, they actually want a confirmation of that data to make sure that it still aligns with their regulations that were just officially passed and finalized. Wow. So that's something to think about, as well as they want an annual source reduction plan that's also due the end of May. And it's basically just what they want to know because their focus is to have a 25% of excuse me, a 25% reduction of single-use plastics by 2032. They're asking companies to track how much plastic they're sending into California and what their plan is for being able to hit that target by 2032.

Wow. And that's plastics in California. Yes. That's incredible. I mean, I'd be so interested in learning how they measure that, right? Like, um, and that's gotta be based off of last year's reporting versus this year's reporting.

Yeah. Um, because they'll look right, like they look at the reports because they want to see, well, okay, how much plastic did they ship in last year versus this year? Is there any kind of reduction? Are they because they want to see that you're actively making a plan to be able to be compliant with that 2032 deadline? Um, August, they actually will ask for a follow-up report from May just to see how you're doing and how the plan's coming. Wow. Yeah.

So for people listening who were unaware of that May deadline, maybe absolutely freaking out right now, um, what would you say to one of those companies? Do your best.

There's a lot going on. Um, and I personally don't believe that these laws were were built with our industry in mind. If you do your best to just get your packaging data together, get a report in, just do your best to be compliant because realistically, um if that's all you can do, I think that's better than nothing. And you're already gonna be a step ahead people who don't do it at all.

Right.

Yeah. Yeah.

And the longer you wait, the more fine, the worse it's gonna get more than penalties. Start now. Start as soon as you can. I think, and that's probably the same advice for companies who are not in a state with these regulations because it's probably going to come at some point. Yeah.

Yeah. And like I said, Stacey, it's not just for manufacturers in a state. Like if you're a manufacturer and you live in Texas and there's no EPR laws yet, it doesn't matter because if you sell into California, you're still an obligated producer. So again, like if if you sell into any state with EPR laws, it's best to just go ahead and be prepared, get that data together because like we talked about previously, other states are coming. Um, so these are only these regulations are only growing and states are only adding as time passes.

Really, really good advice. Have you worked with companies that are filing some of their I mean, are you allowed to share maybe any, you know, obviously don't name companies, but um any pitfalls or like mistakes that first-time filers are making? Or do you think that maybe there's some forgiveness in the process because it is everyone's first time?

This is what I can share. Um, I can say that companies that I've had the pleasure of working with are obviously dealing with a lot of what the like the rest of the industry is, which is just not having that data, and you're having to report based on estimations. Um, and I can tell you that we've had a couple that they said, Hey, like, are you sure? Can you tell us if this is um if this is accurate or how you came to this? And you flat out have to tell them we're doing the best that we can with the data available and we know that it's going to get better as you know, time continues. But as of right now, this is why we came to this, this is why. And they've accepted that. So the the pitfalls, right, are like the lack of packaging data, and a lot of it is just estimations based on like um average industry weights for our packaging, you know. Um but again, that was I that's the biggest thing we've seen. Or I can tell you, California, they want your plastic counted a certain way that's different than the rest of your packaging when you do reporting, and that's just something you have to watch out for, but it's definitely not detrimental, right? They'll just ask you to fix it.

Okay, yeah. So being really careful and um documenting your methodology sounds like it's a smart way to make sure that when you're submitting, you can explain it and then continue improving on it. That's a great tip. Yeah, awesome. When we think about packaging and recycling, I immediately think of the easy things, right? Cardboard

Designing Packaging That Costs Less

um and like plastic jugs that you put your oil in, right? Um, but there's also specialty packaging that's like come like made up of all these other different composites. So I judging by your face, you've been dealing with this as well. And I guess that makes it a little bit more complex for the reporting too.

Um, and you know, I I do think that they are not a solid way to recycle those mixed materials. I do think that they're still going to landfill, um, just from what I've heard from pros. But again, like the goal is to design packaging that is going to be more sustainable and easy, um, easier to be recycled, you know, because not only does it benefit the state in the recycling program, it'll benefit the producer as well because they're hoping to be able to lower costs and packaging fines as the program matures and producers are able to make their packaging just a little more sustainable or eco-friendly.

That's a really good point. And I'm sorry that we didn't that we didn't make this point yet. But the point is to influence some of these producers to make their packaging more sustainable so it doesn't end up in the landfill. See? So, and then that will change how you report. Now, obviously, easier said than done. Um, I'm trying to think of any examples in the aftermarket of a of a company changing their packaging, but I immediately think about like, you know, when you go to the grocery store and the cartons used to be that styrofoam that you can recycle and now they're that biodegradable cardboard.

Yeah. Um, I could point out what Europe does for people who I mean, it this is not something I'm recommending. This is just saying um something that I do know about, you know, the plastic water bottles, for example, or the just the plastic bottles in general in Europe, how the cap doesn't come all the way off the carton, you know, and it's attached. I love that. And it's kind of crazy because the cap is going to be there no matter what, but because it's attached to the rest of the packaging, it's technically like reduction because um it's just one thing instead of like two separate things. So that's always something to think about too. Is like if you were to think of how can I change my packaging to even be a little more sustainable or make it a little easier to be recycled? It's so funny, but that is that is like a great example of what I've seen people do. I have no idea how that would work for like anti-freeze containers. Right.

Um, but it's cool. Absolutely. I love no, that's actually a really good, that's an exercise, I think, for the aftermarket, right? How many different types of packaging are there? Right. And then when you talk about mixed materials, I'm I think a lot about shipping. And I think about there's um plastic tubs of oil inside cardboard boxes. Those cardboard boxes are then shrink wrapped onto. A pallet with plastic saran wrap before it gets shipped, right? Like that's three different types of materials once it gets to you that you have to recycle and dispose of.

Oh, yeah. And you report on all of it typically. I know palettes for Colorado and Oregon, um, they're not as big of a deal. Um, but California wants all of it. So California wants like you'll pay fines on your palettes, you'll pay fines on your shrink wraps, um, or your shrink wrap, excuse me, like the cardboard box, the label on the cardboard box, the tape, um, the tape. Even the tape. Even the tape. But the good the good thing is if you can prove that your palettes are recyclable um or even just used again in California, that'll help. Um, that will reduce like what you pay for your packaging fines if you can prove that you reuse your palettes. So just something fun to think about.

Yeah. Yeah. Wow. I mean, I actually find that really fascinating because it sounds like there's an innovation challenge here. Oh, yeah. For the aftermarket, right? Glue instead of tape or a different type of biodegradable cardboard, you know, whatever. There's so many different options out there. So I predict that we're gonna be seeing some pretty major shifts in brand packaging over these couple of years as the laws kind of make their way across the states.

I think it's a great opportunity for great packaging engineers to come and show us what they can do.

Yes. Yeah. Packaging engineers, give us a call. Yeah, please. Wow. Okay. Um, what else would you, or what haven't we talked about so far when it comes to EPR that you think companies should know in order to, you know, keep traction in a time of kind of what seems to be a little chaotic as they're trying to figure out these laws?

So I feel like we covered the basics. Let's not information overload them today. Yeah. Because it is a lot. Um, but again, just find someone in your organization, whether it's sustainability, whoever um is willing to take this on and start getting your packaging to like start getting your packaging data together, start gilt getting your spreadsheet right, like your internal compliance um platform, if you want to call it that, together. And just just do your best. Um, I do believe that there are opportunities for things to be more efficient in the future, but that's not right now for this specific thing. And it's okay to start at base level um and build from there.

Absolutely. Yeah. Amazing. And how can people find you if they want to look you up or get some more information?

Where To Follow Updates And Connect

My website is www.boltkoff advisorygroup.com. It's super easy. Um, as well as I am Kylie Boltkoff Whiter on LinkedIn. You should be able to type in Kylie Boltkoff and find me. Please message me or reach out to me if you need any help. Um, and that goes for everyone because ultimately at the end of the day, I'm still for the industry and happy to help whether I am your consultant or not, because this is important and it's har it's hard to get a hold of. And I would just, I'd love the opportunity to help you understand it a little better because it's not, it's not easy. Definitely. Yeah.

And thanks for taking the time to distill some of this for our audience. I think it's going to be really helpful.

Well, thank you for having me, Stacy. You're a great host.

Appreciate you.

Cheers.

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