EPR Reimbursement: Who Gets Paid In CO, OR, And CA
Christine Yeager breaks down extended producer responsibility (EPR) funding models across Colorado, Oregon, and California. While producers pay for full recycling costs in Colorado, only two out of seven states with packaging EPR laws fully fund the system. Christine details the differences between net cost and incremental cost structures to clarify how states reimburse service providers and collection programs. She outlines available fee exemptions and reduction pathways for producers operating private take-back systems. Understanding these state-specific nuances helps CPG leaders optimize compliance budgets and capture available fee offsets.
---
Watch the episode here
Listen to the podcast here
EPR Reimbursement: Who Gets Paid In CO, OR, And CA
We're going to dive in deep again. We've had some interviews that, hopefully, you've been enjoying. A lot is going on. For the next conversation, I think it'd be helpful to understand a little bit more about where the money goes in Extended Producer Responsibility. It's my show, so I can do whatever I want. Hopefully, you enjoy this topic, and it's helpful and clarifies some potential misconceptions around what EPR is funding.
Understanding What EPR Laws Actually Fund
When people hear Extended Producer Responsibility, first of all, they don't know what it is, usually. If they do know what it is, they might assume or think that means producers are paying for recycling. That is true in Colorado. One hundred percent of the cost of recycling is covered by Extended Producer Responsibility dues, as they're called in Colorado.
Out of the seven states with packaging EPR laws on the books, which are California, Colorado, Oregon, Maine, Minnesota, Maryland, and Washington, only two are designed to fund the whole recycling system. The rest either ramp up to it over the years or, by design, they're only ever paying for part of it or improvements to the existing system. The real question is not whether producers are paying. It's what are they paying for? What slice of the waste diversion pie are they paying for related to packaging?
In the last episode, I got into textiles, which is a category where the system from a municipality standpoint barely exists, but from a privatization standpoint exists. It's growing. There are still some gaps, or else we wouldn't need textile EPR, but it's all outside of the existing curbside collection process, which is different and unique than what's happening in the packaging space. Packaging is, generally, some level of recycling. It’s available curbside.
I want to unpack a little of this plumbing of the systems around who is getting reimbursed with these EPR programs, what these programs cover, and if there is any way for a producer to not pay for some of that material if they are funding collection? There are some opportunities if you are funding something outside of the existing system, which will happen a lot in the textile space more so than in the packaging space because there are a lot of private companies and brands funding some level of take-back programs, if you will.
Defining Service Providers In Packaging Systems
Quick vocabulary check. Service provider. In Extended Producer Responsibility speak, a service provider is any entity that does the physical work in the recycling system. You might call a service provider anybody who provides your company services. In the EPR or Extended Producer Responsibility space, this is any entity that provides services to municipalities or people in collecting material, hauling, transporting it, and sorting.
If you're a transfer station, you might be considered a service provider, and then somebody who's producing the bales or processing those bales. It is everything until you get to the end material that can be sold. That final flake or pellet would be considered the responsible in-market material. That's not part of the service provider, but all the steps leading up to it.
I've talked about this before. A responsible in-market is a bit of the destination, and the service provider is all of the costs of goods sold along the way to get to that destination. It's very important to understand that in the EPR space within service providers, there are those that provide services for curbside recycling or your general curbside solution versus alternative collection or non-curbside processes. Those would be some of those materials that are not as recyclable.
Extended Producer Responsibility Funding: Navigating EPR compliance requires understanding who counts as a service provider across curbside and alternative collection systems.
Net Cost Versus Incremental Cost Models
Let’s talk a little bit about net cost versus incremental costs. This is some of the backbone of what we're going to talk about in this episode. Not to give you a whole business class definition of this, but net cost is the total cost of running the system minus whatever the recovered material sells for on the commodity market. You can use net cost in any way if you're analyzing your business. What I'm talking about here is the cost to collect, sort, and process material net, the commodity value of that in-market material.
The reason why EPR exists is that, generally, the net cost is higher than the commodity market value. There's also incremental cost, which is much narrower. It's only the additional money needed to hit a new target. For example, a new collection rate or a new contamination rate. It is the cost that it would take to infuse into the system to ultimately improve the net cost. Some states make producers cover the net cost of the whole system.
Others make them only cover the incremental costs of the improvements. In all of the scenarios, it’s the same producers, assuming they sell into that state, and they’re reporting the same tonnage. They’re reporting all of the tons of material sold into the state. The fees attached to those materials may cover the total net cost of the system or incremental improvement cost to the system.
I alluded to a responsible in-market. I'll quickly clarify that a responsible in-market is where a recovered material goes to become something new. It can be shipped overseas, but ideally, the market is in the United States, and the program incentivizes such. They have to be processing the material from those states. It cannot be burned or dumped in order to flow through this reimbursement process.
A quick clarification of eligible or covered costs. Not every dollar a service provider or a local government spends gets reimbursed. Each program defines a specific set of eligible covered costs. In some states, that definition is narrow enough that it can be one of the most important things to understand before you're going and requesting your reimbursement, especially if you're not a traditional curbside operator.
Most packaging EPR laws don't fund 100% of recycling systems. Here's what producers actually pay for across state lines.
Before we dive into all of that, a quick news roundup. This will be airing, hopefully, the day before my birthday. That's the plan, anyway. If you live anywhere that has a dark sky, one news roundup is that every year, there are falling stars for my birthday. In 2026, there's a new moon on August 12th, which is my exact birthday. Nonetheless, my point is that there's a Perseids comet or meteor shower. There's some type of debris that's happening every year around this time of year.
It looks like there's a bunch of falling stars. There should be good visibility. If you can go out, enjoy the stars, and celebrate my birthday, then you should do so. I am a Leo. We've already established that in episode one of the show. The Oregon packaging EPR law went to trial from July 13th through the 17th, 2026. One of my favorite quotes from this Friday afternoon at the end of the trial from the judge is, “I truly have not made up my mind on what to do, how to analyze this problem, and what conclusion to reach.”
He further advised that the dormant commerce clause issues have been fully briefed and require no additional submissions. He posed six questions focused exclusively on procedural due process, including whether a constitutionally protected property interest is at stake and what process is constitutionally required and what appropriate remedy if the producer agreement is unconstitutional, but the RMA is otherwise lawful. I'm not a lawyer. Talk to your lawyers.
We’ll wait and see what the actual outcome and decision is that this judge makes. This will be an indicator, if you will, for potential lawsuits in other states. I've mentioned this, but if I haven't, seventeen attorney generals across the United States, plus the same association that brought forth this Oregon lawsuit, have filed a lawsuit in California. All eyes, still. Maybe I can provide an update for August 11th, 2026. It depends on who you are, but it is fun for me, who likes progress in the circular economy space.
Maybe not so fun if you're a brand impacted by it. In international news, Italy is taking steps towards a textile EPR. Regulation is part of the national strategy for the circular economy and will require both manufacturers and large-scale distributors that first place textile products on the Italian market to assume new responsibilities for waste management. That has not passed yet. They're taking steps towards a textile EPR.
There is already a textile EPR in France and some other countries, but not very many. There are a few, like maybe two other countries. Latvia, I feel like, is one of them, which is a small country compared to Italy. Italy is a huge fashion market, so it'd be a big impact, I would assume, if that happens. It is something to keep an eye on if that's your industry. Some good news. If you like circular economy, which I assume you do if you're tuning in to this show, the furniture industry is embracing more recycled material.
Not everybody thinks about the furniture industry as a big place for the use of recycled material, but fabrics and the durability of this material that makes up your outdoor furniture have come a long way. People may or may not be familiar with Trex decking, but there's also Pollywood. There are different outdoor furniture manufacturers, but even those companies might've been outliers. What this article is saying is that it's becoming a bit more table stakes in the outdoor furniture category.
They're using more recycled textiles, FSC-certified timber, and weatherproof fabrics, which improves the longevity of the fabric itself. Let's not get into the potential implications of that. Nonetheless, this is a trend being outlined in the furniture news outlet. I love to see recycled material talked about in these industry sectors because that means that it's more than just in the recycling news. Bracket. It's showing up where brands and folks in the industry are reading about trends.
There is this concern around greenwashing in this space, but they’re working on being very consistent in this industry with quality claims and trying to have some standardization around the claims that are being used to claim recyclables made from recycled material and things of this nature, like FEC certified. They addressed this challenge with some clarity around some verifiable claims that the industry is using. I'm going to shift to almost everybody's favorite topic, which is CAA News or Circular Action Alliance News.
Circular Action Alliance Deadlines And State Rules
Hopefully, if you're a producer, you would have gotten your July newsletter. The headline is, California Individual Source Reduction Plans were due August 3rd. Technically, the deadline is August 1st. I love how this whole year, the deadlines have been on a Saturday or something, and then it's the next business day. Their effective deadline is August 3rd, 2026. If next year, August 1st falls on a Monday, it will be August 1st.
The portal has been open for a while. This is making a commitment to how much virgin plastic a company is planning to reduce. However, there are bonuses and maluses that we apply to whatever you report year over year. The plan has to be brought together by CAA, who then reports it to CalRecycle. That needs to add up to a 25% reduction between 2023 and 2032 across the industry. Colorado and Oregon invoices would be due July 30th if you chose two invoices. Double-check.
There is no way to straight up double-check. You have to ask producer services to confirm whether or not you have any outstanding invoices. They should let you know if you do. This is producers only. There was an opportunity to do a voluntary California Source Reduction Survey. It's not mandatory, but it's asking producers their level of confidence in their plan and what level of incentive would change a producer's packaging decisions.
An interesting survey request alongside the actual source reduction plan. You could fill it out anonymously. We'll see what comes from these two big deadlines of this Source reduction survey. We should see some interesting updates from CAA with all of this input and information. A side little update on CAA Washington. This is still what the CAA would call emerging states. These are states that haven't yet had any invoices.
Understanding net cost versus incremental cost definitions is key to forecasting your company's state EPR obligations.
The team from CAA toured recycling facilities in a few rural counties and keynoted the Washington Refuse and Recycling Association meeting. It is good to see them walking, understanding, and seeing the operations firsthand before writing their program plan. Let’s go back to service providers. We talked about them in general, but who qualifies in each state? In Oregon, under the Recycling Modernization Act, the money from producers flows to the operators of the recycling system.
This is the local governments and the commercial haulers and processors, which I'm finding is a very broad term, who collect and handle material. There are also brokers that can show up within this, but brokers can also be responsible in-market. Oregon reimburses service providers and local governments for things like transportation and processing. Oregon reimburses the operators of collection. It does not cut a separate reimbursement check to a producer for running their own collection.
We'll talk about more of that when I get into some of the available exemptions. There's a very unique exemption in Oregon for producers who do pay for their own collection. Colorado's program is built to reimburse the recycling services that handle covered materials. Collection and processing run through the system. What makes Colorado distinctive is that it also formally recognizes a category it calls an individual producer of an alternative collection program.
In plain terms, Colorado leaves a door open for a producer who stands up their own collection to be treated as a service provider for that material that they are alternatively collecting. Side note, though. If you're interested in textiles, this is a bucket of work that will be augmented in the textile space because there are a lot more of these individual producers and a lot of private companies or nonprofits running these alternative collection programs.
Under SB 54, California's list of who can apply for reimbursement is quite broad. There are local jurisdictions, haulers, processors, and alternative collection systems, and they all apply through the same machinery. In California's program plan, it calls out that you can not just request reimbursement, but you can also request innovation and capital investment type of stuff.
That’s pre-investment before you've spent your money. In California, if a producer runs their own collection, the path isn't necessarily a special producer exemption. It would be registering as an alternative collection system and then applying for reimbursement through the same portal as a hauler would use.
Categorizing State EPR Funding Structures
What the programs cover, which ties into that definition. Here's a sentence I want you to keep in your head. There are two key funding words. Net cost and incremental cost. Which one a state's law uses tells you about the size of an EPR bill. Net cost means producers cover the total cost of the system minus what the material sells for. Incremental cost means producers only cover the new money needed to hit new targets on top of a system that already exists.
I'm going to sort all of the 7 states into 3 buckets because 2 would apparently not be enough. Even though those are key aspects, nothing as straightforward as US EPR. Bucket one, full net cost. Colorado and Maine. These two go all the way. Colorado is the cleanest example anywhere in the country. The statute has producers reimbursing 100% of the net recycling services and cost of cover materials. Maine gets the same destination from a different road.
Producers reimburse municipalities for recycling costs, benchmarked to a median cost per ton, and the first checks are expected around the fall of 2027 from producers into the municipalities. The ambition is still to cover the full cost of recycling or the net cost. Bucket two is partial but climbing towards near full-term. There is a situation where it's not 100%. I noticed that some of these laws that were passed later in Minnesota, Maryland, and Washington follow the stair-step approach.
They are eventually going to be full-cost programs, but they don't start at 100% the way that Colorado's does. They step up on a fixed schedule written into the law. Minnesota ramps up to at least 90% of the net cost of recycling by 2031. Maryland goes 50% in 2028, 75% in 2029, and then 90% in 2030. Washington goes 50%, 75%, but then 90% by 2032. They all have different timelines. Too simple to be consistent, but not to the state's fault. They were all past the different years and what have you. They all reach a 90% threshold, not 100%. It's almost fully covered.
There's California and Oregon. California is the biggest market. Oregon is a sizable market. They aren't aiming to fund the whole system. California makes producers pay for the new and incremental costs of hitting its targets, not the recycling that already exists. Separately on top of that, there's a whole plastic pollution fund of $5 billion, which is $500 million a year for ten years. We love acronyms. It's the PP MF, Plastic Pollution Mitigation Fund.
This is applied per pound and/or per component. There's this portion that has to be focused on reuse. Written into this structure is not necessarily as cleanly as net cost versus incremental costs. It's funneling funding directly towards reduction in virgin plastic and increased use of reusable packaging, which would require industry-wide investment. That's why it's baked into the base cost. There are also additional bonuses and maluses for your Source Reduction Plan.
California's fee structure is the most complicated, hands down. If you want more information, I'm happy to talk about it, or go to CAA's website and ask somebody there because I'm ingesting what they are sharing with me. It’s complicated. The program plan, as it stands, does very meticulously outline available costs that you can request reimbursement for. It has this option to be pre-funded before you spend it, as a grant would be.
Oregon is the only state that calls itself shared responsibility, specifically. It means producers fund specific pieces of the system while local ratepayers keep paying for the base curbside service. Here's what I mean in an example. In Oregon, producer money is targeted at defined slices, not the whole bill. Producers fund things like payments to processors and the cost of cleaning up contamination. You can get incentives to improve your contamination rate, which is true in Colorado as well.
You get more costs or reimbursement per pound if you have a lower contamination rate. Meanwhile, the base curbside collection that already exists in a location is still substantially funded by local ratepayers who have been paying for that already. Oregon deliberately did not shift the entire cost onto producers. It layered producer funding on top of the existing ratepayer system to fill the gaps and ultimately raise the floor. That's why Oregon can be a larger market and still generate a relatively modest producer bill.
Not everybody would agree that it's modest, but nonetheless, that's how it's structured. That's also why service providers are still trying to figure out how to navigate what becomes incremental to the existing system, but then denotes an opportunity for payment. What this means for your business planning is that fees are covering the cost of different items, different types of things, and different scales of things. You need to take that into account when you are modeling out potential fees in future states.
US packaging EPR laws split into three distinct funding models. Here's how state requirements vary for brand owners.
Hopefully, in October 2026, we'll see some additional fee schedules for the emerging states. Certainly, for Washington, because I understand there's supposed to be an invoice for that state in 2026. Nonetheless, an important aspect of any financial model for EPR is understanding these ramp-up periods and what the cost of the program is covering when comparing fees. What has come up a couple of times with some of my clients, but then also different folks I've talked to, is, “I already do some amount of collection back of house in my facility,” or, “I am paying for third party to collect and process my material because I'm able to provide them a clean stream.
Navigating Fee Exemptions And Collection Offsets
That's not going through the existing curbside processes. Can I get a benefit for that because I'm effectively supporting the recycling system?” The answer is yes. It's different in each state. In Oregon, there is something called the 86913. There is a producer-funded collection exemption. It's geared towards B2B collection, but it is available for more than just B2B collected materials. If you do the work to make the claim with the documentation, you can avoid the fee entirely for the pounds that you have paid to collect.
Colorado gives you a credit against your dues if you apply for it or potentially through ecomodulation. California makes you pay in full and then apply for cash back later. Let me dive into this. In Oregon, the 86913 exemptions. There is a whole page on DEQ's website, which is the Department of Environmental Quality in Oregon, that approves this exemption, that is dedicated to explaining this process. There's a form that you have to fill out, and you have to provide chain of custody documentation. Where your material is going has to go to a responsible in-market.
There are no CAA-confirmed responsible in-markets yet, but there is a self-attestation process that you can complete to make this claim. If your in-market is on that self-attestation list, then you can potentially receive this exemption. The request for this exemption is due March 31st of each year. If you didn't do it, you've missed your 2025 opportunity. If you're capturing the data the rest of 2026, you can apply for it by March 31st of 2027. I know this is feeling long, but it's important stuff to understand.
In Colorado, it's not the same as an exemption of your pounds directly one-for-one. It offers an application-based reduction or offset of your producer dues, but only if you fund or operate a collection program for a material that, one, an MRF doesn't process, and, two, hits or beats the plan's minimum recycling rate target. It's a little more strict in the qualifications.
You may still pay your dues, but you may also apply for a credit if you meet these requirements. CAA Colorado will be able to potentially provide you this credit on your invoice. The caveat is that this is only stood up after year one of operation. This won't become available until 2027. This is to ensure budget stability. If you've done a bunch of collections in previous years, you won't necessarily get credit. You may get credit for stuff done in 2026 if you're making the claim for 2027, if they stand it up in time.
It may be that they're standing it up later in the process. We don't know yet when this is to be stood up. In California, there's no exemption or fee credit process. You would need to qualify yourself as an alternative collection system and apply for reimbursement the same way anybody else would. As a producer, if you are paying, you would have to complete both steps in the process. You have to claim your pounds that you produce and sell into the state, and then you would need to request reimbursement for the pounds that you are collecting.
All of this hinges on providing the necessary documentation and chain of custody information and showing that your material is being recycled. You would be carrying the full fee obligation and then having to also participate in the reimbursement cycle. It'll be interesting to see how this plays out because California also has a textile EPR. This is something that a pro who is not CAA will have to grapple with probably on a larger scale.
To bring this whole thing back together, there are two main ideas in this space. The first is that what a program covers is not universal. It is different. Two of the seven states fund the full net cost. Three are climbing a tower up to 90%. Two, including the largest market, will only ever fund a slice of the process of the costs, or generally, incremental costs. The second point is that how you reduce what you pay is also not universal.
If you're a producer, you have the opportunity to reduce. It's different for each state. How you qualify is different. This is also true if you are a unique service provider. It may be different in how you qualify across each of the states if you happen to operate in all of the states. You need to, as a producer and as a service provider that operates across multiple states. I know a lot of service providers don't operate across multiple states, but there are some out there, and many of them are innovative.
State EPR regulations are evolving in real time. Focusing on material strategy transforms regulatory friction into market edge.
While you need a national EPR strategy, it is also important to dive a little deeper into the nuances of each state to make sure you're capitalizing on the opportunities in each state. A lot of people are hyper fixated on California for good reason. It's the largest market with EPR. It's often the largest market for a company in their sales. It's big, but there might be opportunities in some of these earlier states that are further along, like Oregon and Colorado, to find some fee relief while you're preparing for California.
Here's the mindset shift I want to leave you with. It's easy to look at what I described with seven states, multiple funding models, and different exemption mechanisms and feel like the whole thing is a mess. I almost hate to make this reference, but I'm going to. I'm calling myself under, but I'm reading Dungeon Crawler Carl. If you haven't heard of it, then I'm sorry, but it is incredible.
I'm on book three. They're in this level called the Tangle. EPR can feel like a tangle. I don't understand what's going on, but my husband has been reading it ahead of me. He's like, “Don't worry about the puzzle of the level. Don't worry about the tangle. Worry about the story that's going on in the book and the end goal in this book.” They have to get from level to level. If you haven't read it, you need to. It's incredible.
Turning Regulatory Complexity Into Strategic Advantage
My point is the tangle can feel too much. That's true with EPR, but I'd push back on that. What you're looking at is a system figuring itself out in real-time. The messiness isn't failure. It's what early operational maturity looks like. If you're an active participant in the process, then you can focus on the destination, which is the end goal of driving circularity.
It is important as a producer and as a service provider to make sure you're getting your fair share of that end goal, and you're paying your fair share of that end goal. In both capacities, if you are already paying extra and supporting the pro on their journey, then you should be getting the reimbursement for that. We're all moving and marching towards this end goal of improved circularity, so try not to let the noise distract you from that goal.
Maybe one practical step is to pick your single biggest volume covered material and ask the question about that material, the biggest aspect of your P&L. Ask, “In which of my states could this material qualify for an exemption, an offset, or reimbursement? Am I pursuing it?” Whether you're a service provider or a producer, think about it in that context of, “What would be the biggest bang for my buck? If I missed out on this, what would I be missing out on? Is there an opportunity there?”
Embrace the change because the system is still being built and the rules are still being written. We're all trying to navigate it together. I've heard so many people say to me, “There is so little I know in this space,” or what have you. There's so much we're all learning together. We can rely on each other. I dove into Dungeon Crawler Carl, so it's on the brain. He's building a community of people.
In that tough environment, it's important to lean on each other and build a place where we can trust each other and move towards circularity. I promise I won't talk about Dungeon Crawler Carl anymore. Thank you for tuning in. If you made it this far, I know this is a bit long, but I hope you found it helpful and valuable. We’ll talk soon.
Important Links
Last Episode - Navigating The Real Mechanics Of Extended Producer Responsibility
How Recycled Materials are Reshaping Outdoor Furniture Retail | Furniture News