News

Landmark Plastics Law Signed, Avoids November Ballot Fight

Following a great deal of wrangling of stakeholders, the Legislature and Administration, Senator Allen (D-Santa Monica) saw his work on single-use packaging and single-use foodservice ware come to completion last week. SB 54 has been a work in progress for over four years, having been first introduced in 2019 and failing to pass each year thereafter amid a host of business community concerns and that of other stakeholders.

However, at the outset of 2022 Senator Allen and his team opted to begin a different approach that brought together a small table of stakeholders to hash out a deal that aimed to be sufficient for the November plastics ballot measure proponents to remove the measure so as to avoid what was expected to be a costly and contentious ballot fight. At the table were environmental organizations, waste and recycling companies, local governments, and business interests. The negotiations spanned the course of six months and right up to the wire with the final bill language needing to be in print for 72 hours in order to be taken up by the Legislature for passage. Among the key provisions of the bill that resulted in a better outcome than the ballot measure includes the following:

• SB 54 can be amended to address problems, refine provisions, etc. (Ballot could have only been amended in furtherance of the Act but couldn't include backsliding)
• Significantly reduced CalRecycle Authority (Ballot provided unfettered authority to CalRecycle, including the option to ban materials)
• Clear statutory definitions (Ballot kicked the development of definitions to CalRecycle)
• Exempted a number of packaging materials including beverage containers under the state's CRV program (Ballot would have included them under the measure as well as the state's CRV program)
• Producer Responsibility Organization led and managed by industry (Ballot deferred all implementation, requirements and enforcement solely to CalRecycle)
• Eco-Modulated Fees that consider the materials’ recyclability and actual recovery/recycling rates in setting and adjusting fees (Ballot measure provided flexibility to CalRecycle to set fees without clear criteria/parameters up to $0.01 per plastic packaging component)
  • Fees used to help support improved/expanded collection, sorting, reduction in contamination, infrastructure that is focused on the material
• NO bans on packaging / products (Ballot banned EPS and provided authority to CalRecycle to ban additional materials)
• Source Reduction Mandate is more flexible (Ballot measure was straight elimination by 25% by units and 25% by weight per producer)
  • Unit and weight reductions, but the unit reductions can double count for the weight reductions
  • Allows PCR to count towards up to 8% of the 25% of the Source reduction mandate
  • Source reduction is aggregated across all producers (Ballot was source reduction on a per producer basis)
• Provides a pathway, albeit narrower than what was proposed and in prior iterations, for innovative technologies to be considered within certain boundary conditions that avoid incineration, waste to energy and impacts to disadvantaged communities (Ballot did not authorize such technologies)
• Small Business exemption, but small businesses must still only put 100% recyclable/compostable packaging into the market
• Mitigation Funding is much lower than what is believed would be raised with the ballot measure, has a 10-year sunset, clear nexus to plastics in the environment, requires reporting/accountability of the use of the funding on mitigation (rather than other purposes) (Ballot measure didn't clearly define nexus nor did it have accountability and guardrails for what the funding can be used for, funding is required in perpetuity)
• While 54 doesn’t contain explicit preemption, it provides clear guardrails for jurisdictions to pull recyclable materials through the process (Ballot had no preemption, still allowed local jurisdictions to ban materials even if they are meeting their mandates)

Ballot measure proponents ultimately agreed the deal was workable, albeit flagging issues they'd like to see further strengthened to ensure businesses do not water down the law, penning a letter to Secretary of State Shirley Weber who subsequently announced the removal of the measure from the November ballot. Shortly thereafter Governor Gavin Newsom signed the bill into law with a small signing ceremony and little fanfare that included merely Senator Allen, Senator Hertzberg, Assemblymember Luz Rivas and their staff. The bill goes into effect January 1, 2023. In terms of the implementation timeline, it is important for producers to take note of the following key markers (not all inclusive):

By 7/1/2023

• Department Director Shall Appoint Members to Advisory Board

1/1/2024

• Department Shall Report to Legislature on Status of Material Types
• Department Shall Publish on its Website a List of Covered Material Categories Deemed Recyclable and Compostable as of 1/1/24
• Producers of Covered Material shall Form & Join a Producer Responsibility Organization (PRO)
• The PRO shall Submit to the Department a Plan to Carry Out the Requirements of SB 54

7/1/2024

• Department Shall Establish & Post on Website a List of Covered Material Categories

1/1/2025 (Within Three Years of Effective Date, with the PRO having up to Two Years to Develop Plan and Fee Schedule)

• Department Shall Adopt Regulations to Implement and Enforce SB 54
• Producers Shall Begin Paying Established Fees to Implement Plan, PRO Administration, Cover Needs Assessment, Mitigation Funding, etc.
• Department Shall Establish Baseline for 25% Source Reduction Mandate (Based on 2023 Data)
• EPS Mandated Recycling Rate of Not Less than 25%

1/1/2026

• Department Shall Calculate & Publish on Website Current Recycling Rates for Each Covered Material Category

1/1/2027

• Producers Must Join PRO in order to Sell/Offer for Sale/Import/Distribute Covered Materials in California
• Producers Not Joining a PRO must Demonstrate Compliance with Criteria to CalRecycle
• PRO Shall Meet 10% of Source Reduction Mandate with No Less than 2% Movement to Refill / Reuse

1/1/2028

• 30% Covered Material Recycling Rate
• EPS Mandated Recycling Rate of Not Less than 30%

1/1/2030

• 40% Covered Material Recycling Rate
• PRO Shall Meet 20% Source Reduction Mandate with No Less than 4% Movement to Refill / Reuse
• EPS Mandated Recycling Rate of Not Less than 50%

1/1/2032

• 65% Covered Material Recycling Rate
• All covered materials must be recyclable/compostable
• PRO Must Meet 25% Source Reduction by Weight and 25% Source Reduction by Plastic Component for Covered Material (10% Through Refill / Reuse Transition or Elimination; 15% Through Concentrating, Right-Sizing, Up to 8% PCR)

1/1/2027 – 1/1/2037

• Mitigation Funding w/ Sunset 1/1/2037
  • $350 M from Producers
  • $150 M from Plastic Resin Manufacturers

While the negotiation and passage of this landmark bill this year was significant, the work has only just begun. Stakeholders will need to engage with CalRecycle as the Department undertakes development of the needs assessment, a foundational implementation piece of the law, as well as other key regulatory elements to advance the bill's provisions. MKA and its team will be engaged on our clients' behalf and welcome any questions and the opportunity to discuss our clients' needs in this space further. More to come...