California State Senate Bill 54 Chaptered (2022) - (Passed)

Covered products includes single-use packaging that is routinely recycled, disposed of, or discarded after its contents have been used or unpackaged, and typically not refilled or otherwise reused by the producer. Packaging means any separable and distinct material component used for the containment, protection, handling, delivery, or presentation of goods by the producer for the user or consumer, ranging from raw materials to processed goods. This definition also includes: plastic single-use food service ware, including, but not limited to, plastic-coated paper or plastic-coated paperboard, paper or paperboard with plastic intentionally added during the manufacturing process, and multilayer flexible material. Examples of this are trays, plates, bowls, clamshells, lids, cups, utensils, stirrers, hinged or lidded containers, straws, wraps or wrappers and bags sold to food service establishments.

Covered products does not include packaging for the following products:

1. Medical products including devices or prescription drugs under the Federal Food, Drug, and Cosmetic Act
2. Animal medicines under the Federal Insecticide, Fungicide, and Rodenticide Act and the federal Virus-Serum-Toxin Act
3. Infant formula, medical food, and nutritional supplements used for persons who require supplemental or sole source nutrition
4. Plastic packaging for products under the Federal Insecticide, Fungicide, and Rodenticide Act
5. Plastic packaging used for hazardous or dangerous goods
6. Beverage containers under the California Beverage Container Recycling and Litter Reduction Act
7. Packaging materials intended for long term storage of a durable product for atleast 5 years
8. Packaging related to containers for architectural paint
9. Covered material for which the producer demonstrates to the department that the covered material meets all of the following criteria:

(I) The covered material is not collected through a residential recycling collection service.
(II) The covered material does not undergo separation from other materials at a commingled recycling processing facility.
(III) The covered material is recycled at a responsible end market.
(IV) The material has demonstrated a recycling rate of 65 percent for three consecutive years prior to January 1, 2027, and on and after that date demonstrates a recycling rate at or over 70 percent annually, as demonstrated to the department every two years.
(ii) If only a portion of the covered material sold in or into the state by a producer meets the criteria of clause (i), only the portion of the covered material that meets the criteria of clause (i) is exempt and any portion that does not meet the criteria is a covered material

The producer is the person who manufactures a product that uses covered material and who owns the brand or trademark under which the product is used in a commercial enterprise, sold, offered for sale, or distributed in California.

If there is no brand owner the producer of the covered material is the owner, or the the exclusive licensee of a brand or trademark under which the covered product using the covered material is used in a commercial enterprise, sold, offered for sale, or distributed in California.

If there is no person in the state who is the brand owner or licensee, the producer of the covered material is the person who sells, offers for sale, or distributes the product that uses the covered material in or into California.

Producers, retailers, or wholesalers who have less than one million dollars in gross sales are exempt. “Producer” does not include a person who produces, harvests, and packages an agricultural commodity on the site where the agricultural commodity was grown or raised.

Producers must form a Producer Responsibility Organization (PRO) and discharge responsibilities to that organization. If there is more than 1 PRO the department shall establish a process to require coordination between multiple PROs as necessary.

A producer may comply individually without participating in a PRO if the producer can demonstrate to the department recycling rate of 65 percent for three consecutive years prior to January 1, 2027, and on and after that date demonstrates a recycling rate at or over 70 percent annually, or can demonstrate the following criteria: (1) From the 2013 calendar year to the 2022 calendar year, inclusive, the producer achieved a net 5 percent or greater source reduction of its covered materials through shifting to refill, reuse, or elimination. (2) From the 2013 calendar year to the 2022 calendar year, inclusive, the producer achieved a net 8 percent or greater source reduction of its covered materials through optimization, concentration, right-sizing, bulking, shifting to a non-plastic packaging, or light weighting, or increasing the number of consumer uses, (3) Lastly, seventy-five percent of the producer’s covered material sold, offered for sale, distributed, or imported into the state is in a covered material category that meets a 30-percent recycling rate as of January 1, 2023.

PRO(s) must be nonprofit organizations.

Producers are responsible for all costs and operations by providing service or contracting with service providers.

The cost coverage must include operational costs like the costs to collect, sort, avoid or remove contamination, aggregate, and transport the covered material.

The cost coverage must include how the plan shall include education and promotion to encourage proper participation in recycling and composting collection and reuse and refill systems.

The plan must cover costs related to the administration of recycling programs.

The cost coverage must include how the plan will enhance or expand viable responsible end markets in California including manufacturing.

The cost coverage must include infrastructure improvements like enhancing existing materials recycling or composting infrastructure, investments in reuse, refill, and composting infrastructure.

The fee structure and schedule will be set in the PRO's plan. However, it shall be delineated by covered material category and based on factors like costs, ease of recyclability, end markets, collection, processing, and transportation costs and other factors related to operating recycling or composting facilities.

The fees must incentivize high level of PCR materials that do not disrupt the potential for future recycling.

The fees will be adjusted based on actions taken to invest in robust reuse and refill systems.

Fees will be adjusted if specific elements like inks, labels, and adhesives are detrimental to recycling or composting by industry standards and department guidance. Fees must be adjusted based on source reduction related to right-sizing, optimization, and bulking of packaging, or concentrating the product packaged to reduce packaging. Covered material that contains toxic heavy metals, pathogens, or additives shall be subject to an increased fee.

Fees will be reduced if the plastic covered materials are derived from renewable materials.

Producers must ensure that all plastic covered material reaches the following recycling rates - Not less than 30 percent of covered material on and after January 1, 2028. Not less than 40 percent of covered material on and after January 1, 2030. Not less than 65 percent of covered material on and after January 1, 2032.

By January 1, 2032 a PRO must develop and implement a plan to achieve source reduction requirements set in this legislation, including reductions by weight, plastic component source reduction, refill or reuse, source reduced through concentration, right-sizing, light weighting, or shifting to bulk or large format packaging that allows consumers to refill home or commercial reusable containers, or shifting from a plastic covered material to a non plastic covered material. The Department will allow source reduction through an alternative compliance formula developed by the PRO, subject to approval by the department, that offers source reduction credit on a sliding scale based on the ratio of virgin plastic to post consumer recycled content plastic to producers who incorporate post consumer recycled content into plastic covered material. Additionally, there are targets in 2027 and 2030 that act as steps to the 2032 target.

The plan shall include the enhancement of existing materials recycling or composting infrastructure as well as investments in refill and reuse infrastructure.

Expanded polystyrene food service ware cannot be sold in the state unless producers demonstrate the following recycling rates:
(1) Not less than 25 percent on and after January 1, 2025.
(2) Not less than 30 percent on and after January 1, 2028.
(2) Not less than 50 percent on and after January 1, 2030.
(3) Not less than 65 percent on and after January 1, 2032, and annually thereafter.

Producers shall form and join a PRO by January 1, 2024. If there is more than one PRO application, the department shall determine the PRO that can most effectively implement.

Before submitting the plan to the department for approval, the PRO shall submit a proposed plan to the advisory board for review and comment. The PRO shall submit the plan to the department with revisions, if any, in response to comments by the advisory board or public within 120 calendar days of receipt of the advisory board’s comments.

A producer may not sell, offer for sale, or distribute for sale in or into the state covered materials unless the producer is approved to participate in a PRO's plan. If an entity is not a producer before January 1, 2027, but becomes one after that date the producer is required to join a PRO within 6 months to comply.

The PRO shall implement the approved plan within 90 calendar days after approval.

The department shall respond to plan submissions with an approval, disapproval, conditional approval, request for additional information, or timeline for a decision on approval or disapproval within 90 calendar days of receipt.

This legislation sets up 2 funds. The California Plastic Pollution Mitigation Fund and the California Circular Economy Fund. The California Plastic Pollution Mitigation Fund shall consist of all surcharges, interest, penalties, and other amounts collected and paid to the California Department of Tax and Fee Administration. A PRO shall pay five hundred million dollars each year into this fund. The second fund, the California Circular Economy Fund, requires a PRO to pay a charge called the California circular economy administrative fee, on or before the end of the 2026–27 fiscal year and once every three months thereafter to cover the departments costs of implementing and enforcing the legislation.

A PRO shall annually submit to the department and make publicly available via the internet a report that outlines how the PRO is implementing the approved plan and its compliance with the requirements and regulations of this legislation.

Failure to comply with the bill may result in a notice of violation and an administrative civil penalty not to exceed fifty thousand dollars ($50,000) per day per violation.

At minimum 50% of the funds from the California Plastic Pollution Mitigation Fund shall provide benefits to residents living in a disadvantaged or low-income community or rural area.

The plan should include efforts to use education and promotion to encourage proper participation in recycling and composting collection and reuse and refill systems.

The PRO's budget shall include consumer education and outreach costs incurred by local jurisdictions, recycling service providers, and other collection programs. The PRO shall ensure coordination between their efforts and existing educational and promotional efforts.

The PRO shall submit a proposed plan to the advisory board, before submitting to the department. The advisory board will review and comment within 60 days.

The department will establish a producer responsbility advisory board. There are 13 voting and 3 nonvoting members appointed by the director by July 1, 2023.
(1) One representative nominated by a statewide city association.
(2) One representative nominated by a statewide rural county association.
(3) One representative from an environmental protection organization.
(4) One representative from an ocean advocacy organization.
(5) One representative from an environmental justice organization.
(6) One representative from a disadvantaged or low-income community or rural area.
(7) One representative of a materials recovery facility located within the State of California.
(8) One representative of a recycling service provider, or a representative of an association of recycling service providers.
(9) One representative from the composting industry operating in the State of California.
(10) A representative of each of four manufacturers of covered materials of different material types utilizing postconsumer recycled content, one of which produces third-party certified compostable covered material. These board members shall not be a board member of a PRO.
(11) One representative nominated by a statewide association representing the retail sector. This board member shall be a nonvoting member.
(12) One representative nominated by a statewide association representing the grocery sector. This board member shall be a nonvoting member.
(13) One representative of a producer responsibility organization. This board member shall be a nonvoting member.

Recycling means the process of collecting, sorting, cleansing, treating, and reconstituting materials that would otherwise ultimately be disposed of onto land or into water or the atmosphere, and returning them to, or maintaining them within, the economic mainstream in the form of recovered material for new, reused, or reconstituted products, including compost, that meet the quality standards necessary to be used in the marketplace. Recycling does not include combustion, incineration, energy generation, fuel production (except for anaerobic digestion of source separated organic materials), or other forms of disposal.

The department may adopt regulations defining guidelines and verification requirements for covered materials shipped out of state or exported to other countries. This includes processing requirements and contamination standards.

“Recycling rate” means the percentage, overall and by category, of covered material sold, offered for sale, distributed, or imported in the state that is ultimately recycled. The recycling rate shall be calculated as the amount of covered material that is recycled in a given year divided by the total amount of covered material disposed of and the amount of covered material recycled, unless and until the department adopts a new methodology for calculating the recycling rate by regulation.

The PRO fees shall not be passed on to consumers as a separate item on a receipt or invoice.

The department shall prepare one or more initial statewide needs assessments designed to determine the necessary steps and investment needed for covered material, by covered material category, to achieve the requirements of this bill. The needs assessment shall be updated every 5 years as necessary. The department may select an independent third-party contractor to complete the needs assessment. The department or the third-party contractor shall consult with the PRO and local jurisdictions when developing the needs assessment.

“Reusable” or “refillable” or “reuse” or “refill,” in regard to packaging or food service ware, means either of the following: For packaging or food service ware that is reused or refilled by a producer, it is explicitly designed and marketed to be utilized multiple times for the same product, or for another purposeful packaging use in a supply chain; designed for durability to function properly in its original condition for multiple uses; supported by adequate infrastructure to ensure the packaging or food service ware can be conveniently and safely reused or refilled for multiple cycles; repeatedly recovered, inspected, and repaired, if necessary, and reissued into the supply chain for reuse or refill for multiple cycles.

For packaging or food service ware that is reused or refilled by a consumer, it satisfies all of the following: explicitly designed and marketed to be utilized multiple times for the same product; designed for durability to function properly in its original condition for multiple uses; supported by adequate and convenient availability of and retail infrastructure for bulk or large format packaging that may be refilled to ensure the packaging or food service ware can be conveniently and safely reused or refilled by the consumer multiple times.

The department shall conduct and publish online a characterization study of covered material categories that are disposed of in California landfills. The department shall complete the study on or before July 1, 2025. The department shall conduct disposal-based characterization studies to determine the approximate amount of covered material disposed of in California landfills and shall update the study in 2028, 2030, 2032, and at least every four years thereafter.