United States: California Publishes Series Of Important Documents Related To Recyclable Claims (SB 343) And Extended Producer Responsibility (SB 54) Laws

On December 28, 2023, the California Department of Resources, Recycling, and Recovery (CalRecycle) released a series of important documents tied to the state's ongoing efforts to implement two laws tied to recycling and recovery of packaging. These laws include: (1) Senate Bill (SB) 343, which prohibits use of the "chasing arrows" symbol or any other indicator of recyclability on products and packaging unless certain criteria are met;¹and (2) the Plastic Pollution Prevention and Packaging Producer Responsibility Act, an Extended Producer Responsibility (EPR) law, also known as SB 54.²

The newly released documents include:

• The results of the preliminary Material Characterization Study (MCS) required under SB 343, which summarizes the rates at which materials are recycled in the state.
• Draft regulatory text to implement SB 54.
• A list of covered material categories under SB 54, as well as related supplemental material.
• A report to the state legislature on covered material categories under SB 54 that are potentially recyclable.

The documents released by CalRecycle, some of which are still in draft form, will have potentially significant business impacts on companies that use or sell packaging materials in California in the future. Stakeholders that may be impacted should closely review these documents and consider submitting comments, where possible. We summarize the key background information on SB 343 and SB 54 below, followed by a discussion of the new documents released by CalRecycle under each law.

Background on SB 343

SB 343 amended California law to add Cal. Pub. Res. § 42355.51(d)(2), which will limit when a company can make a recyclable claim for a product or packaging to situations where:

• The material type and form is collected for recycling by recycling programs in local jurisdictions that collectively encompass at least 60 percent of the population of the state.
• The material type and form is sorted into defined streams for recycling processes by large volume transfer or processing facilities that process materials and collectively serve at least 60 percent of recycling programs statewide, with the defined streams sent to and reclaimed at a reclaiming facility.

SB 343 imposes a number of additional product specific requirements for recyclable claims under Cal. Pub. Res. § 42355.51(d)(3),³ and sets up a separate recyclable claims standard for materials with demonstrated recycling rates over 75%, as well as for materials not traditionally collected through curbside recycling.⁴Importantly, SB 343 also provides that use of "chasing arrows," including the use of a Resin Identification Code (RIC) surrounded by chasing arrows, is a recyclable claim. Consequently, under SB 343, only packaging that meets the requirements outlined above will be eligible to use the RIC surrounded by chasing arrows.

These requirements stand in contrast to the requirements outlined in the current iteration of the Federal Trade Commission's (FTC) so-called Green Guides, which impose a somewhat lower standard for making recyclable claims.⁵(Of course, the Green Guides are undergoing review, so the current standard in the FTC's Green Guides could change. Please see Steptoe's previous articles on the FTC Green Guides updates here and here.) In addition, these requirements stand in potential conflict with requirements imposed under the laws of dozens of other states, which require the use of RICs with the surrounding chasing arrows for certain packaging materials.

Material Characterization Study Published Under Requirements Imposed by SB 343

CalRecycle published the preliminary MCS that includes details of results from surveys of large Material Recovery Facilities (MRFs) in the state relating to the rates at which materials are collected, sorted, and reclaimed.⁶Publication of the MCS is required under Cal. Pub. Res. § 42355.51(d)(1), and is specifically required to determine which materials satisfy the requirements outlined above in Cal. Pub. Res. § 42355.51(d)(2). Accordingly, the results of the MCS, once finalized, will be very impactful, given that the data and rates at which materials are collected, sorted, and reclaimed, as discussed in the MCS, will heavily influence when a company can make a recyclable claim in the state for a package or product. Therefore, companies will need to carefully review the MCS results to make informed decisions regarding their ability to market materials as recyclable.

The preliminary MCS divides materials into a number of overarching categories, including: (1) paper and fiber-based materials, (2) metals, (3) plastic, and (4) "mixed" materials, among other categories. Additionally, sub-categories of materials also are addressed, including sub-categories for different types of plastic.

CalRecycle will accept public comment on the MCS until February 29, 2024, and a public workshop is scheduled shortly before the close of the comment period on February 13, 2024. CalRecycle will formally publish and finalize the MCS within 60 days following the public workshop (on or approximately April 15, 2024). The requirements imposed under SB 343 come into effect 18 months after the MCS is finalized, or approximately fall of 2025.

Background on SB 54

EPR laws are designed to place a shared responsibility for end-of-life product management on "producers" of "covered materials," instead of solely on the government and the public. This shift in responsibility is achieved through formation of a not-for-profit Producer Responsibility Organization (PRO). Producers of covered material generally are obligated to pay a fee and join the PRO,⁷which oversees financial and physical recovery of covered products. The producer under SB 54 ordinarily is the entity that manufactures a product that uses covered material, and who owns or is the licensee of the brand or trademark under which the product is used. Beginning January 1, 2027, all producers must join the PRO; otherwise, they are prohibited from selling covered materials in the state.⁸

SB 54 is focused on end-of-life product management for single-use packaging and plastic single-use foodware. While EPR laws are traditionally focused on improving recovery rates for covered materials, SB 54 takes a more reaching approach in that it requires producers to also: (1) "source reduce" plastic covered material; (2) ensure all plastic covered material meets progressively increasing recycling rates, topping out at a minimum 65% recycling rate by 2032; (3) and requires that all non-reusable covered material in the state be recyclable or compostable by 2032. SB 54 also incorporates the concept of "ecomodulation" into the fee structure for producers who must join the PRO, thereby allowing the PRO to modulate fees based on characteristics and attributes of the packaging.

Regardless of whether a company is a producer under the law, these requirements will nonetheless indirectly impact companies throughout the packaging value chain, and place significant pressure on upstream companies to help downstream customers come into compliance with SB 54.

Four Key SB 54 Implementation Documents Published

As highlighted above, CalRecycle published four key documents under the state's EPR law, including: (1) draft regulatory text; (2) a covered material categories list; (3) supplemental material related to the covered material categories; and (4) a report to the legislature.⁹

Draft Regulatory Text

The draft regulatory text is intended to help implement SB 54 by adding regulations under Cal. Code Regs. tit. 14, § 18980 et seq. We understand that CalRecycle will open a 45-day public comment period on the draft regulations sometime in early 2024, and also will host a question and answer session on the draft regulations in 2024. The draft regulations address a host of requirements under SB 54, including, but not limited to:

• Definitions for Key Terms.
• Covered Materials and Covered Material Categories (including exemptions thereto).
• Evaluations for Covered Material and Covered Material Categories.
• Responsible End Markets.
• Requirements for Producers.
• Requirements for the Producer Responsibility Organization.
• Requirements for Independent Producers.
• Producer Responsibility Plan Requirements.
• Annual Report and Program Budget.
• Data Reporting Requirements.
• Requirements for Local Jurisdictions and Recycling Service Providers.
• Requirements for the Advisory Board.
• Enforcement Oversight by the Department and Administrative Civil Penalties.
• Additional PROs.
• Public Records.

Covered Material Categories List and Related Supplemental Materials

The covered material categories list and related supplemental materials identify the packaging material categories for covered materials under SB 54, as well as the covered material categories deemed potentially recyclable and compostable under SB 54. These lists are important for several reasons. First, the materials deemed potentially recyclable are based, at least in part, on the materials that meet the recyclable requirements under SB 343, and specifically on the results of the MCS discussed above,¹⁰thereby placing even more importance on the results of the finalized MCS study. Second, all local jurisdictions or recycling service providers (subject to a few exceptions outlined in Cal. Pub. Res. Code §§ 42060.5(b)-(e)) shall include in their collection and recycling programs the identified covered material contained on the lists.¹¹Third, producers will report data based on the covered material categories.

Report to Legislature

CalRecycle is required under SB 54 to release a report to the legislature on the status of covered material categories that potentially meet the requirements to bear recyclable claims under SB 343.¹²Accordingly, the recently published report provides information about how many covered material categories currently sold in California are handled within the state's current recycling infrastructure and that potentially meet the applicable criteria for recyclability claims. This information can, in turn, be used by manufacturers and the public to help determine which types of packaging may be considered recyclable for purposes of SB 54.

Footnotes

1.See California Senate Bill 343, adopted October 5, 2021, available at: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB343.

2. See California Senate Bill 54, adopted June 30, 2022, available at: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB54.

3. Additional product-specific requirements that apply to recyclable claims under SB 343 include: (1) there can be no components, inks, additives, or labels that prevent the material from being recycled per the APR Design® Guide (applies to plastic materials only); (2) the material must be "designed to ensure recyclability" and does not contain any components, inks, adhesives, or labels that prevent recyclability; (3) the material must not contain chemicals identified pursuant to regulations implementing Cal. Pub. Res. § 42370.2(g)(4); and (4) the material must not be made from plastic or fiber that contains perfluorinated alkyl substances (PFAS) meeting certain criteria.

4. See Cal. Pub. Res. § 42355.51(d)(4) - (6).

5. See 16 CFR Part 260. For example, the Green Guides provide that an unqualified recyclable claim is acceptable if (1) recycling facilities are available to a substantial majority (i.e., 60% or more of consumers or communities, considering the locale, if applicable)); (2) the entire product or package, excluding minor incidental components, is recyclable; and (3) the shape, size and components must be accepted by material recovery facility.

6. See SB 343 Material Characterization Study Preliminary Findings (DRRR-2023-1728), available at: https://www2.calrecycle.ca.gov/Publications/Details/1729.

7. Although SB 54 provides producers with the option to not join a PRO, such producers must be able to prove they meet the requirements outlined in Cal. Pub. Res. Code § 42050(b)(2).

8. Cal. Pub. Res. Code § 42051(b).

9.See Plastic Pollution Prevention and Packaging Producer Responsibility Act SB 54, available at: https://calrecycle.ca.gov/packaging/packaging-epr/.

10. We understand that CalRecycle is taking the position that it is unable to make a determination of recyclability or compostability for individual packaging articles because the law incorporates a number of product-specific criteria to make such claims. See, e.g., Cal. Pub. Res. Code § 42355.51(d)(3) and Cal. Pub. Res. Code § 42357. See also Covered Material Category (CMC) List, CalRecycle, December 2023, pg. 2, 14, available at: https://calrecycle.ca.gov/packaging/packaging-epr/. Therefore, covered material categories are identified in the lists as potentially recyclable or compostable.

11. See Cal. Pub. Res. Code §§ 42060.5(a) and 42061(c) - (d).

12. See Cal. Pub. Res. Code § 42061(a)(3)(B).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.