California’s EPR Program Plan: Costs, compliance, and design considerations for producers

On June 15, 2026, Circular Action Alliance (CAA) submitted its inaugural Program Plan to California’s Packaging Producer Responsibility Advisory Board, launching implementation of California’s packaging extended producer responsibility (EPR) program under SB 54. The Plan serves as the law’s implementation framework, detailing how producers will fund, administer, and execute the program to meet California’s source-reduction, recycling, and circular-packaging mandates.

CAA’s proposed Program Plan projects a five-year budget ranging from USD9.3 billion to USD17.2 billion, funded entirely through annual fees assessed on producers of covered materials. The projected budget includes USD500 million per year in statutory contributions to California’s Plastic Pollution Mitigation Fund (PPMF), with an additional USD150 million annually sought from plastic resin manufacturers. These costs are expected to flow directly to producers through recurring invoices beginning in early 2027. Under SB 54, EPR fees may not be passed on to consumers as a separate line item on a receipt or invoice. Source-reduction targets that seek to require fundamental packaging redesign across product portfolios could increase cost and operational pressure.

For companies selling packaged products into California, EPR may require coordinated compliance and challenge strategies. Producers may wish to evaluate their compliance obligations and potential avenues for shaping program requirements. Annual invoices are expected to begin in early 2027, and CAA is also considering issuing 2026 invoices to recover certain pre-program costs.

This alert outlines key elements of the Program Plan. It also compares the Plan to CAA-managed programs in Oregon and Colorado, helping producers assess multi-state exposure and identify compliance opportunities relevant to cost, design, and market planning.

How SB 54 operates in practice

SB 54 shifts financial responsibility for end-of-life packaging management from municipalities to the producers that place that packaging into the California market. The statute establishes plastic recycling-rate targets that are higher than those in other state EPR programs, includes source-reduction mandates with no direct analog elsewhere, and is expected to create one of the largest EPR packaging programs in the world.

The statutory recycling-rate targets are:

• Recycling rates: 30 percent by January 1, 2028; 40 percent by January 1, 2030; and 65 percent by January 1, 2032
  
  
• Plastic source reduction, by weight and components: 10 percent by 2027, 20 percent by 2030, and 25 percent by 2032
  
  
• Re-use, refill, and elimination: 2 percent by 2027, 4 percent by 2030, and 10 percent by 2032
  
  
• Recyclability or compostability: 100 percent of single-use packaging and food service ware must be recyclable or compostable by 2032

More than 3,400 producers have registered. The Plan is in public comment through August 14, 2026, with final submission to CalRecycle in October 2026.

Projected costs for the first five years

For 2027 through 2031, the Plan projects total program costs of USD9.3 billion to USD17.2 billion, funded entirely through producer fees. These costs are reflected in recurring invoices.

Projected costs break down as follows:

• PPMF (statutory): USD500 million per year, or USD2.5 billion for more than five years, plus USD150 million annually sought from resin manufacturers
  
  
• Processing capital and operating: USD931 million to USD3.76 billion
  
  
• Material-specific investments: USD1.93 billion to USD3.48 billion
  
  
• Re-use and refill infrastructure: USD1.09 billion to USD2.33 billion
  
  
• Collection capital and operating: USD721 million to USD1.88 billion

Projected program costs for 2027 range from USD1.26 billion to USD1.87 billion. Invoices are expected to arrive in early 2027, with payment due within 45 days. Under SB 54, EPR fees may not be passed on to consumers as a separate line item. These costs could directly affect producer margins.

The fee structures also intersect with emerging regulatory pressures on chemicals of concern, including per- and polyfluoroalkyl substances (PFAS) and other additives, which are increasingly being addressed through eco-modulation frameworks and state-level restrictions. These overlapping requirements may highlight the need for coordination across compliance, product design, and regulatory strategy.

Source-reduction considerations: Key differences between jurisdictions

No other packaging EPR law in the United States requires producers to reduce the volume of plastic packaging they place on the market. This is where SB 54 diverges from laws in Oregon and Colorado.

CAA’s Plan acknowledges that the 16-month delay in final regulations, which were not approved until May 1, 2026, has impeded progress toward the 2027 goals. CAA is considering whether to submit a unique challenges exemption application – a mechanism provided under the regulations – to obtain a three-year reprieve from the 10-percent source-reduction target. CAA will revisit whether to pursue the exemption after reviewing producers’ Individual Source Reduction Plans, which are due August 1, 2026.

The long-term trajectory, however, will likely be defined by statute. The Plan acknowledges that achieving 25-percent source reduction is likely to require producers to “redesign entire categories of products – if not their entire portfolio – at a pace they have never before contemplated,” and to “transform the customer experience both in-store and at home.”

Multi-state exposure: How California compares to Oregon and Colorado

Seven states have enacted packaging EPR laws, and bills are being considered in several other jurisdictions (including New York, New Jersey, Connecticut, Hawaii, Rhode Island, and Massachusetts). California, Oregon, and Colorado are the three most developed programs, with producer registration, fee assessment, and reporting obligations already in effect. CAA manages all three as the designated producer responsibility organization (PRO), which may support reporting harmonization, although differences in statutory scope, cost, and coverage remain. The same materials can carry different costs across jurisdictions.

Feature	California (SB 54)	Oregon (RMA/SB 582)	Colorado (HB 22-1355)
Materials covered	Single-use packaging and plastic food service ware	Packaging, food service ware, printing, and writing paper	Packaging and paper products supplied to consumers
Business-to-business and tertiary packaging	Included for materials sold and distributed in California	Included for materials supplied to businesses where the business is the end user	Not included; limited to materials supplied to end consumers
Recycling-rate targets	30 percent by 2028; 40 percent by 2030; 65 percent by 2032 for plastic	No statutory recycling-rate target; performance is measured through capture rates and diversion	41 percent by 2030; 55 percent by 2035 for all covered materials
Source reduction	25-percent plastic reduction by 2032, by weight and components	No source-reduction mandate	Per-capita waste-reduction goals modeled at 5 percent by 2030
Five-year budget	USD9.3 billion to USD17.2 billion	Approximately USD190 million per year, based on fee structure	USD215 million to USD397 million per year; USD1.3 billion to USD1.7 billion over five years
Cost provisions	USD500 million per year for the PPMF; re-use and refill investment fees; closure and transfer fund	USD4 million annual administrative fee to Oregon’s Department of Environmental Quality; USD15 million per year waste prevention and re-use fee	None
Fee structure	Base fees by covered material category (CMC), PPMF fees for plastic weight and components, and re-use investment fees for plastic only	Base fees by material category and the Specifically Identified Material surcharge	Base dues by covered material type
Small producer exemption	Gross in-state sales of less than USD1 million	Gross revenue of less than USD5 million or one metric ton; flat-fee tiers available for certain low-volume or lower-revenue producers above USD5 million	Realized gross total revenue of less than USD5 million, not counting on-premises alcohol sales, or less than one metric ton of covered materials
Eco-modulation	Bonuses for high recycling rates and source reduction; maluses for problematic packaging features and toxic additives	Not detailed in the initial plan period	Incentives and maluses for post-consumer recycled use, recyclability, re-use, and refill

 

Variability in producer exposure

The program creates areas of exposure that may differ by material type, format, and product category. Producers may wish to assess both near-term compliance risks and longer-term design and cost implications.

• Materials designated for phase-out. CAA’s plan designates 15 CMCs for phase-out. CAA describes CMCs in this category as materials that, based on current data and foreseeable system conditions, are not expected to achieve recyclability or compostability at scale, even with significant intervention. Materials include polyvinyl chloride (PVC), both rigid and flexible; rigid polystyrene; non-polyolefin mono-material films; waxed cardboard with a plastic component; ceramics; non-compostable wood and organics; and textiles. Producers using these formats may need to transition materials or adjust market participation. Affected producers may wish to consider cost and production impacts.
  
  
• Flexible films and multi-material laminates. Film and flexible plastics are rarely accepted in curbside recycling programs because most materials recovery facilities (MRFs) cannot sort them, and end markets remain limited. Under CAA’s Plan, multi-material laminates face the highest base fees in California, ranging from 13 cents to 39 cents per pound, plus PPMF and re-use surcharges. In Oregon, the same category carries a fee of 102 cents per pound, one of the highest rates on the state’s schedule. In Colorado, these materials are classified as “Not Collected.” Producers that rely on these formats could experience escalating fees across all three states, along with increasing pressure toward redesign or substitution.
  
  
• Small-format packaging. Items with two or more sides measuring two inches or less have “little to no acceptance” in California’s recycling system and require alternative collection programs. This captures a broad range of formats, including cosmetics samples, single-use condiment packets, miniature liquor bottles, travel-size toiletries, and small hardware packaging. Whether all such items qualify as “packaging” under SB 54 remains unsettled. Maine has indicated that this category requires separate legislation. Where these items also contain hazardous substances (e.g., lithium batteries or pressurized contents), recycling mandates may not be achievable without increasing worker safety risk, potentially necessitating health and safety exemptions.
  
  
• Pressurized containers and hazardous-residue packaging. SB 54’s “unsafe to recycle” exemption does not eliminate obligations. Exempted materials remain subject to registration, reporting, and fees, with only temporary relief from recycling-rate targets. This pathway is particularly relevant for containers with flammable, corrosive, or toxic residues. Some of these containers may not qualify as single-use packaging under California law and may therefore fall outside the scope of SB 54. Oregon and Colorado treat pressurized cylinders as covered materials, although these are not currently collected for recycling. Exposed industries include household cleaning products, automotive chemicals, and industrial adhesives.
  
  
• Aerosol cans face increasing multi-state obligations. Aerosol cans fall into the “moderate acceptance” category, with recycling rates below 45 percent for steel and 39 percent for aluminum. The Plan identifies MRF upgrades and expanded collection as potential needs for these materials. Oregon has delayed PRO collection of aerosols until 2028 but aims to address these formats through later plan work. As these plans mature, producers of personal care products, cooking sprays, paints, and cleaning aerosols may experience growing obligations across states.
  
  
• Eco-modulation penalties on packaging design. Beginning in 2028, specific design choices may incur additional charges under the Plan’s eco-modulation framework. The Plan focuses on labels, sleeves, valves, nozzles, coatings, and adhesives incompatible with recycling, with maluses starting at 10 percent of the base fee and escalating to 100 percent. By 2029, hazardous and toxic additives will also face penalties. Packaging features such as trigger sprayers for cleaning products, pump dispensers for beauty products, PVC shrink sleeves for beverages, and multi-component closures may face additional costs.

Next steps and key considerations for producers

Producers should consider the following actions:

• Engage in the public comment period. The public comment window closes August 14, 2026, providing producers an opportunity to shape the program before it becomes final. Producers whose packaging faces particular challenges or heightened costs may wish to submit comments, as the compliance designations and fee structures established now will define obligations for the next five years. Under Section 18980.2.4 of the regulations, only a PRO or an Independent Producer may submit a “unique challenges” exemption application to CalRecycle. Individual producers cannot seek these exemptions on their own. It is within CAA’s discretion whether to establish a procedure to receive and consider applications prepared by producers. Comments addressing specific material classifications, fee methodology, exemption criteria, or implementation timelines may affect program implementation and the allocation of compliance and cost obligations.
  
  
• Prepare individual source-reduction plans. Individual source reduction plans are due in August 2026 and may influence how CAA evaluates whether to pursue a source-reduction exemption.
  
  
• Assess packaging portfolios. Producers may wish to compare their packaging portfolios with the material compliance designations to identify which products face phase-out risk or may require exemptions. Producers of flexible films, multi-material laminates, small-format packaging, and aerosols may wish to prioritize these assessments given the elevated fee exposure and potential phase-out risk associated with these materials.
  
  
• Budget for fee obligations. Beginning in early 2027, fees will include base fees, PPMF surcharges, and re-use investment fees for plastic materials.
  
  
• Evaluate cross-state compliance. CAA’s harmonized fee-setting methodology may support greater alignment in reporting and fee structures across California, Oregon, and Colorado, but material scope and cost obligations differ.

Meanwhile, three environmental non-governmental organizations announced a lawsuit against CalRecycle on June 2, 2026, alleging that the regulations create loopholes for certain recycling technologies they oppose. And on June 22, 2026, a coalition of 17 State Attorneys General and the National Association of Wholesaler–Distributors sued CalRecycle and CAA to challenge the constitutionality of SB 54, alleging that the entire program is unlawful. Producers may wish to monitor the litigation for potential effects on requirements or timelines.

SB 343 truth-in-recycling labeling compliance deadline approaches

Separately, producers should be aware that the SB 343 truth-in-recycling labeling compliance deadline of October 4, 2026 is fast approaching. SB 343 restricts the use of the “chasing arrows” symbol and other recyclability claims on packaging sold in California, and compliance turns on whether the material meets specified collection and sortation criteria. Eighteen trade associations have challenged the law on First Amendment grounds in California district court, but unless and until the court grants relief, compliance remains operative.

Any relief granted in that case may be limited to the named plaintiffs, meaning producers that are not parties to the litigation may remain subject to the October 4 deadline and associated enforcement risk. Potential exposure includes criminal penalties of USD2,500 per violation, civil penalties of USD500 to USD2,000 per violation, and consumer litigation. For many producers, the intersection of SB 343 labeling restrictions with SB 54’s material classification and eco-modulation framework creates compounding compliance risk that warrants coordinated attention.

Alongside policy commitments, data readiness and operational preparedness may be key. Incomplete data, inconsistent controls, and delayed engagement could increase costs, enforcement actions, or barriers to market access.

How DLA Piper can help

DLA Piper’s Sustainability team advises on stakeholder submissions in EPR and environmental regulatory proceedings and is available to assist with comment drafting and strategy, as well as integrated compliance counseling across EPR, recycling, environmental claims, and related chemical and product stewardship requirements.

Please contact the authors for more information on how these obligations apply to your company’s specific products and operations.