New economic assessment reveals cost benefits of California’s SB 54

An updated economic assessment released by CalRecycle shows that California’s Plastic Pollution Prevention and Packaging Producer Responsibility Act, Senate Bill 54 (S.B. 54), could deliver $32 billion in net benefits and slash plastic waste by 1.9 billion pounds.

S.B. 54 is designed to reduce single-use plastic packaging and plastic foodware waste by introducing a statewide extended producer responsibility (EPR) program in California, shifting the responsibility, cost and burden of reducing packaging waste to producers.

California Gov. Gavin Newsom signed the bill in 2022 and ordered a revision of its regulations in March.

This new analysis comes after CalRecycle released revised draft regulations in May, which garnered mixed reactions from stakeholders, lawmakers and industry groups.

“While it appears they were able to improve aspects that help producers more efficiently begin implementing the program, we have concerns with several provisions that appear to conflict with law,” California Sen. Ben Allen, lead author of S.B. 54, said in a statement published May 19. “Notably, it appears the proposed draft regulations exempt certain products that are clearly in the program’s scope.”

High program costs were another criticism of the draft regulations.

“When they have to guess, state agencies will never guess low,” says Heidi Sanborn, executive director of the National Stewardship Action Council (NSAC) and a negotiator of the bill. “They will always guess way up here to be … conservative, because they never want to have people come back to them and say, ‘Well, it costs more than what you said.’”

CalRecycle’s updated costs and benefits analysis of S.B. 54’s implementation estimates it will produce more than seven times the benefits than previously reported. CalRecycle transmitted the “Statement of Regulatory Impact Assessment” for S.B. 54 to the Department of Finance on June 30 and made it public July 11.

“The massive shift in the cost has come from having better data on source reduction,” Sanborn says. “It’s so much more robust and accurate that that alone is driving the majority of the reduction costs. … When CalRecycle did the first batch of cost numbers, they had very limited data. It was almost two years ago, and that’s light years from where we are now.”

The updated assessment estimates $53.3 billion in avoided costs for California consumers and businesses, compared with $21 billion in costs. Estimated implementation costs fell by almost 50 percent thanks to updated data regarding the amount of single-use packaging and plastic foodware in California.

The assessment also highlights $25 billion in avoided damage costs associated with per- and polyfluoroalkyl substances (PFAS) and an increase of more than $14 billion in personal income.

“This analysis makes clear that robust implementation and enforcement of S.B. 54 is critical to deliver significant benefits to consumers, ratepayers, businesses, communities and the environment,” Allen says. “It’s time for us to deliver on our promises so we may simultaneously improve public health, environmental health and affordability across the board.”

With this new economic assessment, Sanborn says the public will have a better understanding of the bill’s benefits, but her critique of the draft regulations remains largely unchanged.

The proposed rules would exempt food packaging regulated by the United States Department of Agriculture (USDA) and U.S. Food and Drug Administration (FDA) as well as over the counter drugs, creating a “massive loophole” if enacted, according to Sanborn.

“That is a huge problem for how much funding is going into the program and how much sorting is going to have to be done,” she says. “If you’re a film packaging producer and you don’t pay into the system—but we’ve got to sort your stuff out because it’s unfunded [and] there’s nobody that wants to take it—we’ve added costs to the system, and that’s where we still have a problem.”

“Weaker implementing regulations excluding products that SB 54 requires be covered does nothing to lower the costs of managing packaging and plastic foodware waste—it just shifts who bears those costs from producers back to consumers and residents,” says California Sen. Catherine Blakespear, chair of the Senate Environmental Quality Committee.

Sanborn also notes small to medium-sized businesses will have to apply to be exempt and go through the process outlined in the bill, while large manufacturers are automatically exempt.

“We still feel this is fundamentally unfair to businesses that pay into the program,” she says. “If it’s not a fair and level playing field, we’re undermining one of the … key pillars of EPR.”

Another concern Sanborn poses includes the removal of competition from producer responsibility. The bill allows for multiple PROs after the initial launch, but CalRecycle has proposed deleting this section of the bill.

Washington-based Circular Action Alliance (CAA) was selected as the program’s first PRO in January 2024. After the release of the draft regulations in May, the PRO said it is advancing implementation in several areas as it seeks to establish the necessary systems and frameworks to meet California’s recycling and packaging waste reduction goals outlined in the bill.

“CAA’s work on California’s S.B. 54 is entering an accelerated phase,” CAA CEO Jeff Fielkow said in a May news release. “With the informal rulemaking period underway and final regulations on the horizon, we’re intensifying our focus on building a robust program plan, reimbursement mechanism to enhance the recycling system and reporting systems to meet California’s ambitious recycling and waste reduction goals.”

Sanborn believes competition is necessary for effective EPR implementation.

“I think they need competition,” she says. “That is what our entire free market was based on.”