Understanding Extended Producer Responsibility (EPR) in the Auto Care Industry

The automotive aftermarket is facing a seismic shift as Extended Producer Responsibility (EPR) regulations gain momentum across the United States. In this illuminating conversation, our host, Stacey Miller, sits down with Lisa Gochenour, Senior Environmental Manager at Highline Warren and Vice Chair of the Auto Care Association's Sustainability Committee, to demystify these complex regulations that are rapidly transforming how manufacturers approach product lifecycle management.

Lisa breaks down EPR in refreshingly plain language – it's essentially a policy approach that shifts waste management responsibility from consumers and local governments back to the companies producing goods. With Oregon's March 31st reporting deadline looming and Colorado and California following close behind, automotive businesses must quickly adapt to state-specific requirements covering everything from plastic bottles and packaging to pallets and wrapping materials.

The conversation delves into the serious consequences of non-compliance, including substantial financial penalties, potential product bans, and market restrictions. But beyond the regulatory challenges, Lisa highlights the opportunities for innovation in packaging design and materials usage that could position forward-thinking companies for competitive advantage in an increasingly sustainability-conscious marketplace.

What becomes abundantly clear throughout the discussion is that EPR regulations aren't going away – they're expanding domestically and internationally. The automotive aftermarket must embrace this new reality with cross-functional teams, data tracking systems, and partnerships with consumers to create effective recycling programs. As Lisa wisely advises, "Don't wait to be reactive. Be prepared to pivot at any time as these laws evolve."

Ready to navigate these complex regulations? Visit autocare.org and search "EPR" to access comprehensive resources including webinars and toolkits designed to help your business prepare for compliance before critical deadlines arrive.

To learn more about the Auto Care Association visit autocare.org.

To learn more about our show and suggest future topics and guests, visit autocare.org/podcast

Chapters

• 0:13 Introduction to Auto Care On Air
• 0:31 What is Extended Producer Responsibility?
• 3:50 State Compliance and Reporting Requirements
• 5:54 Consequences of Non-Compliance
• 8:53 Practical Compliance Strategies
• 13:32 Innovative Packaging and Future Opportunities
• 17:04 Consumer Involvement and Industry Preparedness
• 26:25 Closing Thoughts and Resources

Transcript

Stacey Miller: 0:13

Welcome to Auto Care On Air, a candid podcast for a curious industry. I'm Stacey 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. Today we're diving into extended producer responsibility, or EPR regulations, with Lisa Gochenauer. She's the senior environmental manager for Highline Warren. Lisa has over 20 years of experience in environmental engineering, management and compliance. Lisa also holds degrees in political science and American government. She's the Vice Chair of the Auto Care Association's Sustainability Committee and she's serving her second term as a commissioner for the Iowa Environmental Protection Commission. Lisa and her husband, a veterinarian, also own and operate a vet clinic in Iowa. Lisa loves traveling, cooking and reading, and she's a proud mom to two incredible daughters and six spoiled felines. Welcome, Lisa, Thank you.

Lisa Gochenour: 1:19

It's good to be here.

Stacey Miller: 1:21

I would love to know more about your life in Iowa and the veterinary clinic and the felines, but we're going to save that for carpool conversations, because today we're on traction control and we're talking about this extended producer responsibility and I'm going to need your help explaining to our audience what is it, and it just feels like it kind of came out of nowhere. So what is it and where did it come about? Why did it come about? I definitely agree that it and it just feels like it kind of came out of nowhere. So what is it and where did it come about? Why did it come about?

Lisa Gochenour: 1:47

I definitely agree that it feels like it came out of nowhere, but it is EPR regulations that are a specific policy approach that holds manufacturers, producers and transporters responsible for the entire life cycle of their products, and transporters responsible for the entire life cycle of their products, particularly for disposal and recycling. So instead of placing the full burden of waste management on consumers and local governments and local landfills, epr is shifting that responsibility back to the companies that produce the goods, especially in terms of packaging, electronics and hazardous materials. So it is a way for states and localities to shift the burden of waste management from taxpayers and governments to the producers of the products. So it's a new approach towards sustainability.

Stacey Miller: 2:41

I love the way that you explain. That's probably the most plain speak I've heard it explained because everything I've looked up or I've heard in other content it seems very complicated and what you boil it down to it's waste management and putting it back in the hands of the people that are producing the product. So I think that's really interesting. That's very helpful because, as you know, consumers maybe we don't always recycle. It can be tough sometimes.

Lisa Gochenour: 3:11

It can be, especially in rural areas like I live in.

Stacey Miller: 3:15

You know, that's a really good point because we think about all the different geographies that the automotive aftermarket serve and obviously we reach every single corner of the United States, obviously the globe, but we're talking about this on the U?

Stacey Miller: 3:28

S level today and you know, here we've got the blue recycling bins and you put whatever you want in them. You don't have to sort it anymore Like you used to have to, and they come and pick it up and you don't have to worry about it. But you know, if you're out in more rural areas, you kind of are in charge of taking your waste to the dump or taking your recyclables to a recycling plant, and that can sometimes, I guess, be a burden on consumers right and it can get very complicated Absolutely, and who will take what and where.

Stacey Miller: 3:59

Oh my gosh yeah Like glass metal cardboard, and then you know what is it Composites, so you don't know if it's aluminum or if it is metal, or what is it accepted, right? There's a lot of confusion around that.

Lisa Gochenour: 4:12

I think there is a lot of confusion for consumers and for producers as well, because we're all trying to sort it through and it seems to change constantly.

Stacey Miller: 4:22

So the concerns that these regulations are trying to address is just really making sure that we're recycling all of those materials or disposing of those materials properly. And is it just the packaging or is it more than the packaging it is?

Lisa Gochenour: 4:37

more than the packaging. So packaging is key, but it is, I guess, it depends on your definition of packaging. So, for example, for us, if we're shipping quarts of oil into Oregon, say, the first state that's got the rules coming out we have to worry about the plastic bottle, the plastic cap, if there's a seal on it, and then the cardboard that those quarts of oil may go into, the stretch wrap that goes around the pallet for shipping, the pallet itself. So all of those elements and that's our focus where we're concerned. But I know that if you are a food service provider, they have to worry about all the containers that the food comes in and how it's packaged and report on all those things as well. So there are 60 material categories for Oregon alone and so any one of those categories, if you fall into that, you have to report on the materials in pounds that you're selling into the state.

Stacey Miller: 5:42

Wow, 60 different categories and you mentioned oil, and that was going to be one of my first thoughts was oil. What are some of the key ones? So you said oil. Plastics for sure. So plastic wrapping plastic bottles, yep.

Lisa Gochenour: 6:00

So they also have different things for like tires and microplastics for electric batteries, vehicle batteries. So lead acid, lithium ion for different used oils, fluids, coolant, that sort of thing. Ok, electronics and e-waste, that's huge plastics are huge.

Lisa Gochenour: 6:24

Obviously plastics, that's. You know. Everybody's talking about plastics now, so from plastics in a vehicle when it comes to its end of life, to the plastics that we're shipping in, and it's really state to state. It's interesting that these laws have been set up that way. So what we're dealing with in Oregon is not necessarily what we're going to be dealing with in Colorado and California, which are the next two states that are going to press forward with these laws, so it makes it very difficult in terms of compliance.

Stacey Miller: 6:57

Right, yeah, and the state by state thing is really curious because you mentioned that it applies to manufacturers, producers, transporters, and obviously in our industry you've got manufacturers that are manufacturing and transporting parts with this packaging across state lines. So trying to decipher hey, if I'm a manufacturer in Texas and I'm shipping to all of these states, in each state I have to do something different in order to comply with that regulation.

Lisa Gochenour: 7:31

Essentially, Yep, potentially, obviously. So the US is setting up that you have to register with a producer responsibility organization. Right now, circular Action Alliance is the PRO, the producer responsibility organization, for oregon and for colorado, and they have applied to be for california, but there's no guarantee that they're going to be in the other 47 states. In canada, for example, if you're selling goods up there, each province has different pros and, depending on your material, there might be a specific pro for that as well. So Canada is extremely complicated and their EPR laws are rolling out now as well.

Stacey Miller: 8:14

Oh, wow. And this is this is augmenting, or is it augmenting some of the current like waste management or recycling programs that we have? This isn't replacing it right, like I think about. California has a program, um, or when you have the R134A refrigerant, like a consumer returns that they get their money back and then the retailer is supposed to recycle that can.

Lisa Gochenour: 8:36

Is this, is this in addition to that? This is in addition to that, Um so yep, so none of those are going away either. It's just more and more and more for producers, manufacturers, to deal with.

Stacey Miller: 8:51

It's a really big, really big deal. I mean I love that this push for sustainability is building, but I worry that it seems to it's complicated right. So a lot of businesses are worried about how to operate.

Lisa Gochenour: 9:45

It's extremely complicated yep, um and the epr laws. You know they target producers, um, essentially manufacturers, and then the first importer of records. So if you're the one bringing that material into the state um, you're the one who gets to pay for that.

Stacey Miller: 9:55

Okay. Okay, that's really helpful. And so if you're not complying, there's a big deadline coming um at the end of March, correct?

Lisa Gochenour: 10:03

Yep, um March 31st you have to be registered with and report in Oregon for the materials that you, uh, are selling into the state or importing into the state, whichever way. And if you don't, then the way I understand it which obviously I'm not an attorney or an expert, but you have to they can go back on you. So this is the first reporting year. So we're supposed to report by March 31st on 2024 data. If you don't register and don't report and Oregon figures out that you should be, that you are actually a producer or a responsible party, they will come back on you and you're going to have to report for those years that you missed and pay fees for those years. So Oregon's going to take this data, figure out how many pounds of materials they have in their economy, in the life cycle of these products in the state, and then they're going to set fees so that they can set up the recycling programs, the return centers, the management, all those things they need to. So we don't know what those fees are going to be yet.

Stacey Miller: 11:13

They've kind of given a rough estimate but they haven't finalized them and I believe that we have to pay those fees yet this year in July. So it's fast and furious. Yeah, it seems so, and I would be remiss if we didn't talk about what is the downside if businesses aren't complying with the requirements. What type of consequences can those businesses face?

Lisa Gochenour: 11:41

Penalties are consequences. Fines and financial penalties are huge. We're hearing from the folks that we're seeking guidance from that. These fines are going to be quite large, so it's not an option to ignore them because you will suffer the financial penalty. The states can also take legal action. Your company might be subject to lawsuits, enforcement action, environmental organizations all those things are out. They've also talked about potential product bans and market restrictions. So you don't want to run the loss or the risk of that. Loss of licenses and permits to operate in the states are also on the table.

Lisa Gochenour: 12:22

Obviously, this is going to cause increased compliance costs and those are probably going to get passed along to the consumer. So it'll be interesting to see how the consumer desire for sustainability plays against the desire to manage their pocketbooks, and I'm not sure how that's going to go. Desire to manage their pocketbooks and I'm not sure how that's going to go. It could, you know, there could be a backlash that makes the states pump the brakes on this, but right now we're not seeing that. Obviously, if you get any of these penalties or enforcement actions, it could damage your reputation. That's huge.

Lisa Gochenour: 12:51

You know, in an industry you want a good reputation. You want to be known as a sustainable company, and then it could cause supply chain disruptions if there's restrictions or enforcement actions. That knocks key players out, and then also import and export restrictions, depending on how the states look at the data they get. So it's all very much still kind of a moving target because the states are still finalizing these rules. Even Oregon as we are, you know, facing this deadline in two weeks is still ironing out details of how they're going to act next. So it's an interesting world we live in, because you don't really know for sure where these are going and what you're going to have to do. Wow.

Stacey Miller: 13:34

So not worth ignoring. Not worth ignoring at all. Not worth ignoring these, and making sure that you know, you're you're going to be in line with that.

Stacey Miller: 13:43

Compliance is really important by that deadline. So I mean you're here because you're the vice chair of the sustainability committee here at the auto care association. Highline Warren is a leader in sustainability in the aftermarket. So what are some of the things can you share, just like some of the more practical things that you're doing, or what companies should be doing to ensure that they're going to comply with these, no matter how complicated they may be?

Lisa Gochenour: 14:10

I think for us, because we're still a fairly small company, we are depending on experts to help us, so we've engaged some consultants. One of the critical elements is data being able to gather your data and don't wait until the last minute. So you need your sales data, you need the pounds of each of your components that are going in with these sales, and you need to be able to consolidate that into the reportable format that Oregon wants. So Oregon has put out a workbook, an Excel workbook that shows you how they want their data, and so you need to make sure that you're able to provide that. If you can't, they do have methods for estimation, but I think the fees will be higher if you follow those methods than if you have actual numbers and report on actual pounds. That's what I'm hearing.

Lisa Gochenour: 14:58

And then try and be forward looking. You know this is coming, like I said, in Oregon and then Colorado and California. We know this year potentially Maine and Minnesota. Next year it's also coming to international locations, like I said, canada and others, europe, china, even China, and others Europe, china, even China. So you need to be forward-looking and making plans for ways to accurately capture data as you sell and manufacture products and make sure that you have traceability and can document that, because you need.

Lisa Gochenour: 15:32

Part of the audit process we're hearing for these EPR reports is that the states are going to audit you and make sure that your data is accurate, and so you have to have a narrative explaining how you've gathered your data, how you've compiled it, how you've gotten to these numbers.

Lisa Gochenour: 15:48

So having all of that documentation and maintaining it over the long haul, I think is going to be critical to compliance, and then relying on the experts, because these laws are complicated, like I said, they vary state to state. So if you think you understand it for Oregon, you're probably not going to understand it completely for California, because it's going to change. Just ask for help. Industry groups like AutoCare can offer a lot of support and a lot of guidance by doing things like this, but also by engaging other experts to help their members understand what's happening and then relying on like the Circular Action Alliance to provide guidance. Once you register with them, you get access to their member portal and they have tons of guidance docs and videos and information on there that you can tap into to try and help you understand what's happening and where it's going.

Stacey Miller: 16:45

Absolutely. I really appreciate you sharing some of that, because a lot of that confusion around, you know, is there some sort of standard by which I'm supposed to track and report? You mentioned that one of the tools that they gave was an Excel spreadsheet to help you track the impact and what you're doing and making sure that you're building that narrative. Have you heard of any other tools or platforms that the states are requiring, or is that to be discussed.

Lisa Gochenour: 17:10

I think that's to be determined. So Oregon was the first to roll it out, and so we're waiting to see what Colorado is going to come up with, because they want reporting by July timeframe, and then California after that. So they haven't shown their hand yet on what they're going to want or if it's going to be similar or different. So it's just a watch and see if you can sort it out as they decide.

Stacey Miller: 17:35

And I didn't. You know one thing I didn't think about when it came to you know this, this issue where this regulation is. There's a cost to recycling, there's a cost to proper disposal and and waste management, and obviously I don't I'm not going to ask you to estimate a cost, but companies should be thinking about how do they distribute those costs. Right, I think you mentioned earlier. You know we don't necessarily want to pass that cost on to the consumer, because that's going to become an issue. But how do we make sure that internally, within our own companies here in the aftermarket, that we're handling those costs appropriately?

Lisa Gochenour: 18:11

I think that's going to be critical.

Lisa Gochenour: 18:20

Cycle analysis of your products is going to become a big part of our future, and trying to see how the entire life of the material impacts the organization and the cost associated with every aspect of of its life, and then that it's also going to be critical to do innovative packaging design and to use recycled materials all those things. So there are some I don't know if you want to call them rebates or discounts you can get by doing things like that. In the Oregon rule, you can pay lesser fees if you're doing lifecycle analyses, if you're spearheading or part of a group that's doing recycling activities and collection for the materials you're selling into the state. So being creative in how you can be sustainable and deal with the entire life cycle of your products is going to be a huge part of the next part of industry. I think we're going to have to look at all those different avenues and figure out the best way for each of our organizations to navigate these rules and where we can be innovative, where we can cut costs to survive all this.

Stacey Miller: 19:27

Absolutely. I mean, you said innovative packaging and I immediately the gears started turning in my head because I thought oh man, like Amazon now, sometimes they'll deliver you your stuff and it's not even in a box or in a bag, it's just in whatever. And I actually don't mind that because I think it cuts back on all that waste. And if you think about that in automotive, like it could happen in so many different ways. You talked about the plastic that goes around the pallets.

Stacey Miller: 19:56

Okay, Maybe if those were reusable ratchet straps right, but like a really massive one. There's a big opportunity for brands here to either do that themselves or a company to come in and provide some of those innovative packaging opportunities to reduce that waste.

Lisa Gochenour: 20:11

Absolutely. There's a lot of room for creativity right now, you know, and people talk about refillable containers. So come up with a quart bottle that you can purchase and then go to a location and refill it with your 5W30 or whatever you need so that it stays in the marketplace for four or five life cycles before it becomes a waste. What are things we can do to be creative? There's a lot of smart people in our industry, so I think it'll be fun to watch how that creativity plays out.

Stacey Miller: 20:42

I mean we're we're an automotive, so we're dealing with liquids and chemicals and parts that come apart and go back together, heavy parts especially, right. So packaging is important. But do you ever look at other industries to see what they're doing in packaging and if there are little things that you can can can pick out and bring back home?

Lisa Gochenour: 21:00

to us. We do. Especially, we have packaging engineers and we have some very brilliant people that look at those things and go to meetings and try and figure out. You know what different polymers can we use in our plastic bottles so that they have less of an environmental impact? You know what can we do to reclaim them? There's all sorts of groups out there investigating these things, and so I encourage all of us to try and participate and be a part of the conversation and not wait for the market to drive us, but to try and be creative and lead the way.

Stacey Miller: 21:33

Be proactive instead of reactive. Absolutely, couldn't agree more. So you know there's a lot of positives about this. Obviously, it took the industry by surprise. It's something that we have to really rapidly kind of respond to, but there's a lot of positives in terms of the impact that it's having on the environment. Working in a more cyclical economy. Are there things that you think are that are out there, or maybe they're not out there? Are there different technologies or an innovation that you wish that the industry had to help, you know, comply with these regulations or help us work on it more efficiently?

Lisa Gochenour: 22:09

Yeah, I wish that we had a software provider who could capture all of our data and put it in the format that we need for reporting state to state. That would be ideal for me. I don't think that exists yet. I think people have pieces of that, but I don't think they put the whole picture together. And then also just regulatory watchdog for the industry that would tell you hey, these laws are coming in these locations and you need to be prepared, because right now it feels like each of us individually are trying to sort that out and that, as we learn, we share with each other. But oftentimes, like with these EPR laws, the train is way down the rail before we learn what's happening and then we have to react. You know, nobody budgeted for these fees that we're going to pay in Oregon and we'll have to budget for three states for next year, so any way we could get ahead of that would be helpful Absolutely.

Stacey Miller: 23:06

And it also makes me think about again. Going back to some of the things that our industry is so good at, is standardization, right. So standardization of that reporting across the states could help tremendously. You don't have to fill out 50 different templates, right?

Lisa Gochenour: 23:23

Yeah, and I think that that would be a big thing to do would be to push for that, to lobby for that, to see if, you know, let's have one pro in the US and let's follow one system for all 50 states. I don't think there's any real need for each state to have its own individual take on extended producer responsibility, but I don't think there's any real need for each state to have its own individual take on extended producer responsibility. But I don't know that the states are going to listen to us on that.

Stacey Miller: 23:45

Any thoughts about kind of like the consumer relationship with these regulations? We talked about like consumers are recycling to a point but obviously we have to do something bigger, which is probably the origin of EPR and that's go straight to the source of the waste probably the origin of EPR and that's go straight to the source of the waste. Any thoughts on, like businesses or Highline Warren, partnering with the end consumers of the product and partnering on kind of like this recycling to help kind of, you know, distribute the burden?

Lisa Gochenour: 24:12

I do think that the consumers are going to be key to this, because part of the whole point of the EPR rules is to set up recycling programs in the states to manage all these materials. And for those recycling programs to work, the consumers are going to have to return the materials that they purchase, bring them to reclaim centers and to be part of the process. So consumers are really going to have to be a huge part of this for it to succeed. One thing you learn in political science is that all regulations, models, are supposed to be based on humans as a rational actor. I'm not so sure that humans are always rational actors, so it'll be interesting to see how this plays out, but I definitely think there's gains to be made with consumers. They like sustainability, they like green products, they like to think they're being part of making the planet healthier. So I definitely think that you could partner with them in ways that would enhance your brand, enhance your image and just enhance community involvement.

Stacey Miller: 25:15

If you have recycling centers or recycling days in locations and you can work with local communities, I think that would only help all of us in the long run and especially now, right today's, today's consumer is really like they buy from brands that have these missions that identify what they, what they're into the most, and sustainability is one of those big things. Recycling I see a lot of like clothing recycling and beauty product recycling and reusing the same container, and that really resonates with the newest generation and I think, wow, there's a really big opportunity here, because apparently they're only buying from brands that serve those kinds of missions and if you're not a sustainable brand, then you can't expect to serve them as a customer. So I feel like that's a pretty big imperative for companies to get on the sustainability train.

Lisa Gochenour: 26:08

I think it is. They definitely see that as one of the key qualities they want and companies they buy from and companies they work for yeah, this younger generation.

Stacey Miller: 26:19

it's definitely high on their list of priorities any other thoughts on how the automotive action market can continue to embrace sustainability and drive it forward the way you and the team at Highline Warren?

Lisa Gochenour: 26:32

is. I think one of the things is be prepared. Don't wait to be reactive and think, oh, these are going to go away. These are not going to go away. They're going to be part of our life for the long term. Just expect them to expand into more products, more materials, more locations, and be prepared to deal with the regulators, to understand the rules, to work together with everyone at your company. You know this isn't an EHS problem or an engineering problem. This is all of us managing the life cycle of our materials. So have cross-functional teams that help you with that creativity, with that packaging innovation, with new ways to look at things, and just be creative and be ready to pivot at any time as these laws evolve, because it is certainly a moving target right now.

Stacey Miller: 27:23

That is the lesson of the day Be ready to pivot at any moment, and so so proud to work in the auto care industry. Because I think if there's one thing that we have proven is that we pivot and we evolve, and that's what makes the auto care industry so, so so?

Stacey Miller: 27:38

special and that's what makes the auto care industry so so, so special. There are additional resources for EPR, the extended producer responsibility. On autocareorg. We've got two webinars and a toolkit for you if you're still looking to help demystify some of those requirements in time for that compliance deadline. So if you go to autocareorg you can search EPR in that search bar and it'll take you straight to that toolkit. Lisa, thank you so much for joining me today.

Lisa Gochenour: 28:04

Thank you, Stacey, it was a great time.

Stacey Miller: 28:08

Thanks for tuning in to another episode of Auto Care ON AIR. Make sure to subscribe to our podcast so that you never miss an episode, and don't forget to leave us a rating and review that helps others discover our content. Auto Care On Air AIR a production of the AutoCare Auto Care, dedicated to advancing the auto care industry and supporting professionals like you. To learn more about the association and its initiatives, visit autocare. org.