What Is EPR? And Why Is Everyone Suddenly Talking About It?

A plain-language primer for brand owners who've been hearing this acronym everywhere and want to know what it actually means for them.

The basic idea

For most of the history of consumer goods, the cost of dealing with packaging waste (collecting it, sorting it, recycling or disposing of it) has fallen on municipalities. Taxpayer money paid for it. Brands made packaging decisions mostly based on cost, performance, and aesthetics, with little financial accountability for what happened to that packaging after the consumer tossed it.

Extended Producer Responsibility flips that model. Under EPR, the companies that put packaging into the market (brand owners, manufacturers, importers) are financially responsible for what happens to it at the end of its life. You designed it, you sold it, you pay for what it costs the system to manage it.

How the money actually flows

Producers pay fees into a system administered by a Producer Responsibility Organization (PRO). In the US, that's almost universally the Circular Action Alliance (CAA), a nonprofit designated as the PRO under all seven active state programs. The CAA collects fees, funds recycling infrastructure, runs consumer education, and reports back to state agencies.

Here's the part that catches most brands off guard: the fees aren't flat. They're calibrated to how recyclable your packaging actually is. The mechanism is called eco-modulation, and it works like this: packaging that's easy for the recycling system to handle pays lower fees. Packaging that disrupts or can't be processed by the recycling system pays a surcharge (sometimes two to three times the base rate).

The material and design choices baked into your packaging today are directly connected to the compliance costs you're going to see on your invoices.

Where things stand right now

Seven states have enacted packaging EPR legislation: Oregon, Colorado, California, Maine, Maryland, Minnesota, and Washington. Oregon became the first live program on July 1, 2025 with actual invoices, actual fees. Colorado followed in January 2026. California's full fee program launches January 1, 2027.

If you sell into any of these states, you likely have obligations. If you sell nationally, assume all seven apply and plan accordingly.

What this means for your packaging decisions

Hard-to-recycle materials (carbon black plastic, multi-layer laminate pouches, PVC shrink sleeves) carry penalty surcharges that can reach two to three times the base rate. Recyclable materials, certified recycled content, and lighter packaging earn fee reductions or credits.

This isn't the future of packaging strategy. It's the present.

What sourceM's role looks like

Your brand is the legally obligated producer: you register, you report your packaging data, and you write the checks. Our job is to be the packaging partner who actually understands what's on that bill and why, and then to help make sure your packaging isn't the thing inflating it.

But, what about the pushback?

EPR isn't without controversy. A growing number of brands and industry groups are pushing back. Several trade associations and manufacturers have filed legal challenges arguing that state EPR mandates are unconstitutional. The litigation landscape is still evolving, but no program has been struck down yet and the legal pressure is real and ongoing.

California's own path to EPR isn’t smooth. Governor Newsom rejected the first draft of SB 54 before it was enacted, citing concerns that the fee structure was too burdensome for brands: a signal that even advocates of packaging reform acknowledge the compliance costs can't be ignored. The final version that passed reflects a significant amount of negotiation between industry and regulators, and that tension hasn't gone away.

Some brands are watching all of this and deciding to wait it out, betting that litigation, legislative amendments, or political shifts will change the calculus before they have to act. However, we recommend taking a more proactive approach to avoid potential issues later. Especially since the only immediate requirement under most active programs is registration at this point.

Waiting to do this initial step may create a compliance gap that could be harder to close the longer it goes unaddressed. The legal challenges may succeed and the rules may shift, but the underlying problem of unrecyclable packaging and the infrastructure costs it generates isn't going anywhere so recommend taking your best step forwards to begin addressing the matter as it relates to your company and goals.

Want to learn more about EPR? Download The Brand Owner's Guide to EPR.