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From Costs to Compliance: Working Group Develops Draft for Future Fees and Dues

• California

Over the past several months, Interchange 360 convened a Fee/Dues Setting Working Group—a team comprised of producers, distributors, retailers, and industry experts committed to providing necessary input in the organization’s future fee/dues structures. We can now report the successful results of their work and recognize the outstanding contributions of everyone involved.

Key Principles

The working group was established with a clear objective: to develop a fee/due-setting policy that ensures consistency, equity, and transparency across all jurisdictions where Interchange 360 operates. The group developed four key principles that are the foundations of the policy:

  1. Consistency: Fee/dues-setting methodology will be used consistently across all states. 
  2. Equity: Fees/Dues are assessed based on the cost to manage each product type supplied to market, which vary by material type, size and recyclability, including those who use materials that are not recycled.​ 
    • Cover Program Costs: Fees/Dues must cover the compliance costs in each state.​ 
    • Recalibrating to True Cost: Regularly assess the costs of managing each product type and recalibrate the product fees. 
  3. Clarity: Fee/dues-setting setting will be clear and transparent. 
    • Advanced Lead Time: Notice of any changes to fees/dues in advance of implementation to provide producers with the ability to prepare.​ 
  4. State Compliance: Fee/dues-setting will account for state requirements, including eco-modulation requirements, collection targets, and other program fees. 

These principles ensure future fees/dues meet regulatory obligations while providing fairness, cover the cost of the program, and allow producers to plan and adapt effectively.

Determining Future Program Costs

The program costs in each state will vary based on the state requirements and marketplace conditions. Typical program cost includes material collection and recycling, collection site infrastructure, public communications, stakeholder engagement, compliance reporting, data and fee/dues collection, and state oversight and program administration. Additionally, marketplace conditions such as transport distances, recycling infrastructure availability, commodity prices and other factors, impact program costs. 

Eco-Modulation

U.S. packaging EPR laws include requirements for eco-modulated fees/dues. Eco-modulated fee/dues setting is a mechanism that adjusts fees based on the environmental performance of packaging and is intended to incentivize producers to design environmentally friendly packaging. Fees/dues can either lower producer responsibility dues (PRDs) to incentivize certain practices or increase PRDs to deter certain practices. 

There is a high degree of variance in state mandated eco-modulation incentives (bonuses) and disincentives (maluses), including things like post-consumer recycled content, reduction, recyclability, and reuse. Where there is flexibility, Interchange 360 will strive for as much consistency as possible in setting both threshold criteria and incentive/disincentive rates to provide consistent market signals to producer members. 

Methodology

Fee/Dues setting will follow a four-step process. 

  1. Assess the costs to manage each product type 
  2. Establish a cost-based fee/dues for each product type 
  3. Apply State eco-modulation requirements 
  4. Provide 90-day notice to producers of any fee/dues changes 

Next Steps

The policy will be presented to the Interchange 360 Board of Directors for approval in January. The Colorado dues-setting process using the approved policy will take place in the Spring and final dues will be released by October 2026 before going into effect in 2027.

Preparing for the Future

While Interchange 360 is still determining the eco-modulation factors that will best be applied in Colorado dues setting, the most relevant is likely to be PCR content. Producers are encouraged to start gathering data on the amount of PCR content used in each of their products. Interchange 360’s program includes a commitment to reaching the overall goal of 23.5% PCR content by 2030 and 30% by 2035. Eco-modulation will be developed to help meet these goals. Other eco-modulation factors may also come into play as Interchange 360 gathers more data.

Wrap Up

Interchange 360 strives to be transparent and work on behalf of producers when it comes to compliance. We appreciate all those who contributed their time, expertise, and insights, particularly the participating producers: CITGO, Ford Motor Company, Highline Warren, Omni Specialty Packaging, TotalEnergies, and Tractor Supply Company. As our program evolves around the nation, we look forward to continued engagement with all stakeholders.