Q&A: California PRO deadline approaches July 1

In California, S.B. 54—which created a producer responsibility organization (PRO) to run the statewide collection and recycling program—was signed into law in 2022. Oregon and Colorado have similar requirements.

Now, California sellers of products with plastic packaging, a category that encompasses more than 10,000 businesses, must decide whether to join a California-designated PRO by July 1. The first PRO approved by CalRecycle is the Circular Action Alliance (CAA).

Following are some common questions and answers about the new regulation.

Q: Will my business be required to join a PRO by July 1?

A: CAA set a deadline of July 1, 2024, for producers to register with CAA as the PRO. There is no statutory deadline requiring a producer of a covered material to register with the PRO by July 1, 2024. The next statutory compliance deadline is January 1, 2027. By then, covered producers must have either (a) joined a PRO with an approved plan (i.e., CAA) or (b) received approval from CalRecycle to comply as an independent producer, in order to sell, offer for sale, import or distribute covered materials in the state. See below for the definition of a “producer” and a list of covered materials.

Q: Who is a producer?

A: A producer means:

• a person who manufactures a product that is made using a covered material and who owns or is the licensee of the brand or trademark under which the product is used in a commercial enterprise, sold, offered for sale or distributed in the state;
• if there is no person in the state who meets this definition of producer, then the producer of the covered material is the owner or, if the owner is not in the state, the exclusive licensee of a brand or trademark under which the product using the covered material is used in a commercial enterprise, sold, offered for sale or distributed in the state; or
• if there is no person in the state who meets either of the above definitions, 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 the state.

A 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.

The sale of covered materials occurs in the state if the covered materials are delivered to the purchaser in the state.

Q: What are covered materials?

A: Covered material means:

• 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, and
• 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.

Covered material does not include medical products, drugs used for animal medicines, products intended for animals, infant formula, medical food or certain fortified oral nutritional supplements. Nor does it include packaging used to contain products regulated by the Federal Insecticide, Fungicide and Rodenticide Act or packaging used to contain and ship products that are classified for transportation as dangerous or hazardous materials, along with others.

For further guidance on this law’s applicability to your business and its products, please consult CalRecycle’s published lists of categories of covered materials on its website along with supplemental material.

Q: Are there any alternatives to joining the PRO?

A: Alternatively, a producer may independently comply if the producer can demonstrate specific criteria to the department, and the department determines at its sole discretion that the producer meets all criteria as detailed in the regulation. If you choose to comply individually, then you assume additional individual responsibilities.

Q: How was the PRO selected? Will there be any additional PROs?

A: CalRecycle selects the PRO based on an application process. While multiple applications may be submitted, CAA was the first PRO that CalRecycle approved. Any organization seeking to become a PRO in the future must go through the same application process. A producer need join only one PRO.

Q: How much will this cost my business?

A: The PRO’s plan will include fees for PRO participants. Note that the regulation prohibits fees from being passed on to consumers as a separate item on a receipt or invoice.

The PRO shall determine the fee schedule for each producer based on plan implementation costs, operating costs, costs of completing needs assessment, costs to cover the environmental mitigation requirements and costs to reimburse the department. The fees will include:

• Eco-modulated fee, TBD
• Circular economy administrative fee, TBD
• Environmental mitigation surcharge, TBD
• Penalties and fines, up to $50,000 per day per violation.

Q: What will be required of my business by July 1?

A: The PRO set a registration deadline of July 1, 2024.

Q: What will be required of my business after it joins the PRO?

A: At this point, it is unknown as regulations and plans have yet to be adopted. But generally, a participant will be required to take actions for source reduction of plastic and increased recycling rates of plastic.

Q: What happens if my business does not join a PRO?

A: Your business must pursue alternative compliance or face a prohibition of sales in California starting Jan. 1, 2027, or upon approval of the PRO plan.

Maureen F. Gorsen is a partner with law firm Sidley Austin LLP in Century City, California. She can be reached at maureen.gorsen@sidley.com. Caleb J. Bowers is a senior managing associate with Sidley Austin in Los Angeles. He can be reached at cbowers@sidley.com. Sophia E. Wallach is an associate with Sidley Austin in Century City. She can be reached at swallach@sidley.com.