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Five Things You Really Need to Know About SB 54

Updated: Dec 11, 2023

It is probably fair to say that SB 54[1] – California’s extended producer responsibility (EPR) law[2] imposing source reduction and recycling requirements on single use packaging and plastic food service ware – is not only the broadest and most ambitious EPR law in the United States but also (given California’s position as the fifth largest economy in the world) one of the most significant pieces of environmental legislation passed in decades in terms of impact, scope, and costs.[3] 

As a practical matter, SB 54 will significantly impact, either directly or indirectly, almost every business that sells consumer packaged products or food service ware in California (as well as businesses that sell non-consumer goods that use covered materials as defined by the Act).

Brief SB 54 Overview

According to the Act, only 5% of postconsumer plastic waste in the United States is recycled.[4] Under SB 54 mandates, by 2027, plastic covered materials must meet 10% source reduction goals and in 2028 must achieve 30% recycling rates, ramping up to 2032 when 25% source reduction and 65% recycling rates must be achieved. In addition, by 2032, all covered materials sold in California must be recyclable or compostable.[5] 

“Producers,” who are responsible for compliance, must either satisfy the requirements for individual compliance (which will not be a viable option for most producers given required recycling rates) or join the producer responsibility organization (PRO) selected by CalRecycle.[6] 

The PRO must prepare a producer responsibility plan (PRO Plan) – a comprehensive plan for compliance with the Act – for CalRecycle’s approval. In addition, the PRO must raise $500 million a year over a ten-year period from its members as well as an as-yet-to-be-determined amount to subsidize the implementation of the Act – costs incurred by local jurisdictions, recycling service providers, alternative collections systems and others – as well as other fees and assessments.[7] 

Five Points for Consideration

1. SB 54 applies to owners/licensees of brands/trademarks but also to wholesalers and retailers of products that use covered materials. Producers include businesses that manufacture their own packaging for their products but, depending on the facts, could also include businesses that out-source their packaging as well as retailers and wholesalers who sell the products.[8]

2. Preparations for the PRO Plan, including fee schedules for producers, could begin as early as 2024. Preparing the PRO Plan will be a massive undertaking involving (among many other things), plans for source reduction, recycling technologies, education and engagement, arrangements to supplement curb-side collection, a process for resolving disputes among members, budgets for the administration of the PRO, and a schedule of fees to be assessed against its members. The PRO Plan is due on January 1, 2027 but preparation for the PRO Plan could begin as soon as 2024 (assuming CalRecycle selects a PRO soon after the PRO application deadline of January 1, 2024).[9] 

3. SB 54 is not just about plastic packaging but imposes restrictions on all single use packaging. While source reduction and recycling rate requirements affecting plastic covered materials commence in 2028, all “covered materials” sold in California must be recyclable or compostable by 2032. Covered materials includes single use packaging, whether plastic or not (e.g., glass, paper, bamboo, and metal).[10]

4. Items designated as “recyclable” may nonetheless fail to satisfy SB 54’s definition of what is recyclable. The definition of “recycling” under the Act requires that the waste materials are actually recycled and sent to a responsible end market (whereas in practice, many items marketed and/or designated as recyclable are not actually recycled because there is no recycling capacity or end market). Thus, for example, items marked with the popular chasing arrow symbol to denote recyclability will not be sufficient to establish compliance with SB 54’s recycling requirements. Moreover, the definition of recycling excludes items recycled by certain technologies, such as combustion or incineration.[11]

5. The exemption for small businesses is not self-executing and, depending on the facts, may not apply. CalRecycle, as authorized by the Act, is considering the process for exempting businesses with less than $1,000,000 in gross sales in California in the preceding year, including the financial documents that will be necessary to establish the exemption. Under the Act, CalRecycle may disallow exemptions that “would hinder the ability of a type of covered material or covered material category from complying with [SB 54].”[12] It is unclear how CalRecycle will interpret or apply this provision. One possible interpretation would be, for example, that insufficient recycling capacity for a covered material used by a small producer might warrant denial of the exemption.

The ongoing workshops conducted by CalRecycle and forthcoming rule-making process present businesses with an opportunity to provide input into the development and implementation of SB 54 – at present, the most significant EPR legislation in the United States. Much of the action and heavy lifting, however, will begin after the PRO is selected and the PRO begins the monumental task of preparing the PRO Plan.

[1] California’s Plastic Pollution Prevention and Packaging Responsibility Act (“SB 54” or “the Act”), CA Pub Res Code (“PRC”) § 42040 et al. is administered by the California Department of Resources Recycling and Recovery (commonly referred to as “CalRecycle”). [2] Under EPR laws, producers and/or other entities in the supply chain assume responsibility for a product through the post-consumer stage of a product's life cycle. Three other states (Colorado, Maine, and Oregon) have adopted EPR packaging laws similar to (but not as broad as) SB 54. [3] SB 54 was authored by Senator Ben Allen (D – Santa Monica) and passed after extensive negotiations over several years among various parties. [4] PRC § 42040 (b)(3), [5] See EGC Article on Covered Materials. [6] See EGC Article When Must Businesses Join a PRO. [7] See EGC Article on Producers. [8] See EGC Article on Producers. [9] See EGC Article When Must Businesses Join a PRO. [10] See EGC Article on Covered Materials. [11] PRC § 42041 (aa)(2) and (3). [12] PRC § 42060 (a)(5)(B).F

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