On March 31, Circular Action Alliance (“CAA”), the Producer Responsibility Organization (“PRO”) for California, Colorado, and the only contender for PRO in Oregon[1], submitted the first draft of its Program Plan (“the Plan”)[2] for Oregon’s Plastic Pollution and Recycling Modernization Act (“the Act”).[3] The Plan outlines how CAA proposes to achieve the goals of the Act and provides details on how CAA intends to satisfy a range of requirements, such as classifying materials, setting producer fees, and balancing annual budgets.
Although the Plan is tailored to Oregon’s program, it also provides insight into strategies that CAA may later adopt in California and Colorado regarding data collection, protecting confidential data, and (subject to variations in each state’s program) general approaches to setting fees.
Public comment on the Plan is open until May 10,[4] after which Oregon’s Department of Environmental Quality (“DEQ”), the implementing agency, will provide feedback to CAA. The second draft of the Plan is due at the end of September; the final Plan becomes effective July 2025. The 200-page Plan addresses many features of the Act, but there are a few sections particularly important for producers – entities selling or distributing covered products in or into Oregon that must register with the PRO,[5] report data, and pay fees.
The Materials Strategy subsection of the Operations Plan chapter lays out initial plastic recycling rate projections, with the qualification that those may change depending on whether DEQ designates 2022 or 2023 as the baseline year. CAA anticipates adding certain plastic product categories (such as PET thermoforms) to its list of collected materials for recycling in order to achieve the plastic recycling rates required under the Act (25% by 2028, reaching 70% by 2050).
The subsection also presents a cloud-based system CAA is developing to track producers’ material flow data and maintain strict confidentiality.[6] CAA has indicated this portal will be designed to facilitate producer reporting across the three subject states by harmonizing metrics, material categories, and other data inputs.[7] CAA will also provide training and support for producers to use this reporting portal properly – a critical component not only for successfully implementing the Act but also for appropriately charging producers.
To that end, DEQ has proposed to adopt a new regulation, with CAA’s support, that producers report their 2024 covered product data to CAA by March 31, 2025. That would give CAA three months (before the July 1, 2025 start date for the Program Plan) to analyze producer data and set an appropriate producer fee schedule. CAA’s goal is for as many producers as possible to register and report their data so that CAA has a more accurate picture of covered product “supply.” With greater supply, producer fees per covered product category should be lower while still allowing the PRO to generate enough fee revenue to satisfy its obligations under the Act.
The Financing chapter is the most important part of the Plan for producers preparing for compliance costs. The chapter explains the guiding principles CAA uses to set producer fees and specifies what many of those fees will initially be.
Under Oregon’s program, producers with less than $5 million in annual gross revenue or who sold less than 1 metric ton of covered products in or into Oregon in the prior calendar year are exempt. [8] In addition, the PRO is required to establish a uniform fee for producers with less than $10 million in gross revenue or use of less than 5 metric tons of covered materials sold into the state.[9] Under the Oregon Program Plan, the uniform fee for the intermediate classification of producers generating between $5 and $10 million in annual gross revenue or selling between 1 and 5 metric tons of covered products in the prior calendar year would be a flat annual fee between $600 and $1,700 depending on the scenario.[10]
Neither California nor Colorado have express statutory provisions for a uniform fee for an intermediate category of producers. While Colorado's small producer exemption is similar to Oregon's (less than $5 million in global revenue or use of less than one ton of covered materials for products sold or distributed within or into the state), [11] California's exemption applies only to businesses with less than $1 million in in-state gross revenue (there is no covered materials tonnage threshold) and only if the exemption receives discretionary approval from CalRecycle, the implementing agency.[12]
Producers with greater revenue and volume of covered products sold will pay a two-part fee. The first component is a base fee per pound per covered product material category. For example, in the 2025 “base case” (low-cost scenario), producers would pay 6¢/lb of paper/fiber, 24¢/lb of rigid plastic, and 34¢/lb of flexible plastic sold.[13] The differences among material categories reflect attributes such as the cost to manage materials and a requirement to maintain a higher average fee across non-recyclable materials compared to recyclable materials.
Different factors will come into play in setting the base rates for the California and Colorado programs (e.g., different population base, different recycling rates and capacity, different categories of fees – and in California, the PRO must raise $500 million a year from its members to fund a Mitigation Fund), so base fee rates in those states may differ significantly from the base fee rates in Oregon and from each other.
The second component of producer fees functions as a fee adjustment according to a graduated fee structure that sets eco-modulated credits and penalties according to lifecycle assessment criteria developed by DEQ in its rulemaking.
CAA is still developing a graduated fee algorithm that will “provide producers with practical and measurable criteria upon which to qualify for fee incentives and disincentives” and anticipates incorporating it into the second draft Program Plan in September.[14] However, CAA acknowledges that “[e]xperience has shown that it will take years for producers (and their suppliers) to become familiar with reporting requirements, material category and product mapping, and to establish reliable systems to compile their data.”[15]
While CAA hopes to lessen this challenge through its harmonized reporting portal and associated producer training, the supply data CAA uses to establish the fee schedule will likely involve uncertainty in the initial program years. Producers can expect fees to be adjusted as producer data reporting becomes more accurate and comprehensive.
CAA presented its Program Plan to Oregon’s Recycling Council on April 9 and made clear that much of the fee, cost, and revenue content will likely be adjusted in subsequent drafts. The flat fee ranges for qualifying producers, material category fees, CAA’s forecasted budgets, and the graduated fee structure will all be updated – potentially significantly – as CAA continues its iterative work on the Program Plan, producers report their 2024 data, and the first years of implementation provide CAA with a real-scenario data stream. Notwithstanding, this first draft of the Oregon Program Plan is a useful gauge of fee relationships among material categories, the guiding principles behind the fee schedule, and a tool for producers to understand how their fees may be assessed.
With the Program Plan published, CAA’s July 1, 2024 registration deadline approaching,[16] and Oregon’s proposed new rule requiring submission of sales data by March 31, 2025, now is the time for potential producers to evaluate their producer status and how they fit into CAA’s developing fee structure.
