USA – CALIFORNIA Trends and Developments Contributed by: Eoghan Gallagher and Catherine Johnson, Environmental General Counsel
As the fourth-largest economy in the world, California continues to assume a leadership role and shape the national trajectory in the environmental field, includ- ing chemical and consumer-product regulation, its extended producer responsibility (EPR) packaging programme, and landmark climate change initiatives, including disclosure requirements and stringent new restrictions on ozone-forming emissions. While Cali- fornia maintains its role as a national leader in envi - ronmental policy, actions by the Governor’s office this year – one involving still-unfolding EPR regulations, and the second a veto on chemical restrictions – sig- nal that there may also continue to be checks of some nature on programmes deemed too burdensome for business. EPR Packaging Programme The Plastic Pollution Prevention and Packaging Pro- ducer Responsibility Act (SB 54), California’s EPR pro- gramme for packaging and plastic food service ware, represents a conceptual shift in managing the entire lifecycle of these covered materials. Six other states have adopted similar EPR programmes, but Califor- nia’s programme is widely considered the most strin- gent and the broadest in scope. SB 54 creates a powerful economic incentive for industry to redesign packaging and reduce the use of plastic food service ware. The California law mandates three core outcomes by 2032: (i) a 25% decrease in plastic packaging; (ii) all covered materials must be recyclable or compostable; and (iii) increased recy- cling rates for plastics. The penalty for failing to com- ply with these and other requirements is a ban on the producer’s sale of covered material into the state. SB 54 allows for civil penalties of up to USD50,000 per day per violation against non-compliant entities. “Producers” must join and fund a Producer Respon- sibility Organisation (PRO) and pay fees to the PRO based on the weight and type of covered materials that they use. Producers are usually the owner or manufacturer of the brand or licensee of the products associated with the packaging but in certain cases can be distributors or retailers. Only producers reg- istered with the PRO may sell or distribute covered materials in California after 1 January 2027.
The PRO implements a system where fees are “eco- modulated” favouring, for example, easily recyclable materials and post-consumer recycled content (PCR) and disfavouring other covered materials, including those that contain certain chemicals. Programme momentum initially faltered when Gover- nor Newsom refused to sign the last rulemaking pack- age, asserting the proposed regulations presented unacceptable burdens to business; however, a new rulemaking package is now poised for adoption in early 2026. The new proposed rule provides significant conces- sions to industry, primarily through broader applica- tion of two exemptions: less stringent requirements for the refill and reuse exclusions and a broad exemption for certain packaging regulated for safety by federal agencies, which could conceivably include most food packaging. The later exemption is not self-execut- ing but requires an application to the state regula- tory agency, the California Department of Resources Recycling and Recovery (commonly known as “Cal- Recycle”). Even under the revised proposed regulations, Califor- nia’s programme is still much broader in scope than other state programmes, including, for example, more business-to-business packaging, a lower threshold for which small businesses are exempt from the pro- gramme, source reduction requirements, a functional ban on extended polystyrene food service ware, and its unique definitions of and requirements applica- ble to recyclability and/or compostability of covered materials by 2032. To date, there has been no litigation challenging the California programme, although that may change after the final regulations are adopted. Oregon’s EPR packaging programme faces a lawsuit from a trade association representing distributors, who are particu- larly hard hit by the EPR programmes, alleging various theories including breach of due process and equal protection claims involving interstate commerce. The disposition of the Oregon lawsuit may impact other state EPR programmes – not necessarily by invalidating the programmes but potentially through
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