California lawmakers passed the country's toughest plastics pollution and recycling plan June 30, setting a 65 percent recycling rate target and putting in place an extended producer responsibility system for packaging.

The Legislature's vote, which passed with bipartisan margins, creates a system that could have a major impact on plastic packaging. It calls for a 25 percent reduction in single-use plastics and requires companies to pay $500 million a year for a decade into an environmental cleanup fund.

Importantly, it also cleared the way for a key political horse trade.

Supporters of a parallel referendum on the November ballot, which would have put a 1-cent tax on single-use plastics and banned expanded polystyrene, said they would withdraw their initiative if the legislation became law.

The presence of that ballot measure hanging over the legislative talks drove all sides to compromise and create what supporters said would be the most far-reaching plan in the U.S.

But the ballot organizers, who were less enamored of the legislation than other environmentalists, also cautioned in their statement of likely fights ahead.

The referendum organizers, led by three Californians with decades of work on environmental and waste management issues, pointed to a June 29 statement from the American Chemistry Council as evidence the plastics industry will seek to undo the law, known as Senate Bill 54.

"It is clear from today's ACC statement that the hope and promise around SB-54 may quickly dissolve into what we have experienced from the plastics industry in the past: deception, blame, and false promises," the referendum organizers said. "The signs of what comes next are troubling."

They said they felt ACC would seek through legislation or lawsuits to undo parts of the massive compromise bill around chemical recycling and source reduction.

But ACC's Vice President of Plastics Joshua Baca pushed back on the ballot organizers' statement.

"Petitioners of the ballot initiative released a statement yesterday inaccurately questioning our intent to work collaboratively on the implementation of SB-54," Baca said. "Nobody got everything they wanted in SB-54, but we remain steadfast in our belief that all stakeholders can do more to benefit California by working on constructive solutions rather than attacking each other."

Industry groups including ACC and the Plastics Industry Association generally favored the legislation over the ballot plan. Likewise, some environmentalists and lawmakers felt a legislative solution was preferable to the expense and uncertainty of a statewide ballot campaign.

"A state law is easier to refine than a ballot measure that's passed by the voters," said state Sen. Ben Allen, D-Santa Monica, the lead author of SB-54.

First, the law creates an extended producer responsibility program for packaging, making California the fourth state in the U.S., and the largest so far, to adopt such a regulatory approach that's more common in Europe and Canada.

"We start with a basic EPR premise … that producers of a material should be responsible for the end-of-life costs to manage that material and not local ratepayers," Allen told a legislative hearing June 29. He pointed to rising recycling costs for California cities and said local governments support the plan.

"The bill [is] the strongest, most ambitious and well-vetted packaging and plastics extended producer responsibility bill in the world," he said. "It was the product of literally months and months of negotiations with leadership from the environmental side, industry side [and] local government."

The plan passed the 80-member state Assembly on a 66-1 vote late on June 29, and then cleared the 40-member Senate with 29 yes votes and 11 members not registering votes in the morning of June 30.

Democratic Gov. Gavin Newsom signed the law June 30, and as expected, the referendum organizers withdrew their initiative from the November ballot.

The EPR program requires the industries to set up a producer responsibility organization, or PRO, by 2024 to develop plans to meet the law's recycling and source reduction goals.

The PRO will have an advisory board of many different groups and must submit its plans to the state agency CalRecycle, which has the power to mandate additional requirements on the PRO or revoke it, an unusual authority in EPR plans.

"CalRecycle has the authority to approve or disapprove the plan and then they can insist upon changes if the plan is not designed to meet the requirements laid out in the [law]," Allen said.

The law, similar to versions of SB-54 introduced over the last three years, requires that materials be compostable or recyclable within 10 years.

But it includes new provisions modeled after language in the referendum, requiring 25 percent reductions in the plastics covered by the plan, measured by item count.

The EPR program includes more than plastics, taking in single-use packaging broadly as well as plastic-coated paper products, multilayer flexible packaging, foodservice ware, and wraps and wrappers sold in foodservice.

But it also exempts a long list of packaging from the EPR requirements, including perhaps most prominently containers in the state's bottle bill, including PET beverages. It also exempts plastics used to ship medical products, infant formula and hazardous materials.

And importantly, it also creates a carve-out for products with a recycling rate of at least 65 percent in 2024, 2025 and 2026, a provision put in to accommodate the paper industry, which has recycling rates above that level and argued it should be excluded for its recycling performance.

By comparison, the overall recycling rate for plastic packaging in the U.S. is about 13 percent, according to figures from the Environmental Protection Agency. Rates for some particularly hard-to-recycle materials are lower.

ACC raised concerns about that 65 percent provision for the paper industry.

"Last-minute carve-outs for certain materials could ultimately jeopardize an effective recycling system that is supported by all the materials going through it," Baca said.

The law sets targets for plastics packaging covered in the program at 30 percent by 2028, 40 percent by 2030 and 65 percent by 2032.

The law also requires companies, beginning in 2027, to pay $500 million a year into a fund for environmental cleanup and requires companies to start using some refill and reusable packaging systems.

Changes made in the law around chemical recycling late in the negotiations drew concerns from ACC but support from some key lawmakers, like the chair of the Assembly's Natural Resources Committee, Luz Rivas, D-Arleta.

In a June 28 hearing, Rivas said those changes were needed to get her support and alleviate concerns about pollution in communities around such facilities.

Baca, however, said ACC prefers language in previous drafts of the law around chemical recycling.

"Without new, innovative recycling technologies, it will not be possible to meet the demand for recycled plastic in food-grade applications," Baca said. "The definition of recycling [in the law] needs to be improved and made clearer so new, innovative technologies … count in achieving the circularity goals."

Environmental groups supporting the law said that technologies including gasification, pyrolysis, incineration and fuel production do not count as recycling.

They also said the law prohibits the PRO from using funds to invest in such technologies.

ACC also expressed concern over provisions in the source reduction components of the law that it says could limit recycled content to 8 percent in some plastic products.

"We believe future legislation or regulations should incentivize the use of more post-consumer recycled content in plastic packaging and take into consideration the climate impact of switching to materials with a higher carbon footprint," Baca said.

A statement from the group Stop Plastic Pollution said the law includes language specifying that switching from virgin materials to post-consumer materials does not count toward source reduction.

The law passed with clear majorities in both chambers and with bipartisan support.

Several Republican members of the Assembly said in hearings in the days leading up to the final vote that while there are "lingering" concerns, they were supporting the plan.

Frank Bigelow, R-Sutter Creek, the vice chair of the Assembly Appropriations Committee, told Allen at a hearing that it will help local governments deal with the rising costs of recycling.

"It's a very good bill that you've been able to present to us today," he said. "While there may be questions or lingering concerns because not everything is answered as clearly as we'd like it to be, I think we have to recognize something must be done.

"We have to move forward and we have to do something about the waste streams because the costs that you're articulating at the local government level, where actually I came from, I've seen it grow tremendously," Bigelow said.

The legislation had some pushback from lawmakers in hearings, who questioned whether it would add costs to the businesses that would ultimately be passed on to consumers.

"I want to thank everyone for working so hard on such a difficult bill. And it's still a difficult bill for me," said Assembly Member Kelly Seyarto, R-Murrieta. "Even though we're making producers pay the costs, those costs eventually wind up on us, on taxpayers. And right now, we have a tremendous cost of living issue."

But other lawmakers noted the rising costs paid by taxpayers and city governments for managing waste and trying to make recycling work.

Allen brought a lobbyist from the California League of Cities to testify with him at the Assembly hearings.

"Cities across California have seen the cost of recycling increase and once-reliable recyclables markets no longer exist," said Derek Dolfie, a lobbyist with the league. "Local governments have little to no control over the products that will be introduced into the marketplace, but we're ultimately held responsible for their management and disposal."

A lobbyist for the Association of Plastic Recyclers and other groups, including the Recycling Partnership, said they supported the bill and argued that the costs would be lower under the law than not.

"We believe implementation of this bill is at a lower cost than taking no action on such an important issue," said Bruce Magnani, with the firm Houston Magnani and Associates.

The Plastics Industry Association said in a statement before the bill passed that while progress had been made on some provisions, it could not support the legislation. It did say that the legislation was preferable to the ballot, though.

But environmental advocates say the law is balanced.

"Senate Bill 54 has all the elements to ensure impactful and enduring reduction of single-use plastics," said Alexis Jackson, associate director of the Nature Conservancy's California oceans program. "It is data-driven to ensure measurable source reduction goals are met and was developed in partnership to balance the needs of the state, environmental advocates and forward-thinking industry."

The leaders of the ballot initiative — two members of the California Coastal Commission, Caryl Hart and Linda Escalante, and former Recology executive Michael Sangiacomo — wrote that they were focused on how the law would be implemented.

"While some have made claims that SB-54 is the strongest plastics pollution policy ever to be enacted in the United States, we are less interested in hyperbole and more focused on how the policy will be implemented and enforced," they wrote.

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