Who Pays for Waste? And Whose Costs Matter Most? Why California’s SB 54 Must Succeed

NSAC
7 days ago
7 min read

Updated: 5 days ago

The intent of SB 54 was to reduce system costs and ensure those with the ability to do so had a fair share of the financial responsibility – that was the deal that became law, and it must be upheld.

By Heidi Sanborn, Executive Director, National Stewardship Action Council

On May 27, 2025, CalRecycle hosted a public workshop to present and gather feedback on proposed regulations to implement California’s Senate Bill 54 (SB 54)—the most ambitious packaging reduction and recycling law in the country.

As one of the 25 key negotiators of the bill, I can say that at its core, SB 54 is about reducing system costs and ensuring a fair sharing of who pays for the system. In a “free market” system, conservative economists have always said that to reduce regulation, make polluters pay. In economic terms, this is “internalizing the externalities.”

When the “producers” of packaging are financially responsible for the lifecycle costs of the packaging they produce, they have a financial incentive to reduce those costs. When most producers are C-corporations, that are legally only responsible for making money and not considering people or the planet, we must give them a financial reason to care about reducing end-of-life costs and externalities onto others to pay for things like litter abatement and public health impacts.

Externalities in this case include the environmental and economic harm done to local governments, taxpayers, ratepayers, public health, and ecosystems, that is going unaccounted for in the product price. There is no price signal to the consumer that they will have a big waste bill to pay when they buy the product, or they may have increased health impacts and healthcare costs. When lifecycle costs are in the product price, it sends the market signal to the consumer – is it worth it? And if end-of-life costs are fully paid for by the consumer who chose to buy the product and also benefitted from its usage, the product will have an end-of-life management plan. This is what extended producer responsibility (EPR) is, from solely making money from the sale to now being responsible for its full lifecycle costs.

What’s rarely acknowledged is that our current waste financing is, in effect, socialism. We have socialized the costs at the back end, while allowing companies to take all the profit and externalize onto others all the costs of end-of-life management. This is NOT fair! No one wants to be held responsible for things they don’t control. But that is the job of local governments – to protect health and safety of citizens by safely managing waste that is generated from a system they have no control over nor profit from.

According to the California Ocean Protection Council, California communities are estimated to spend more than $428 million annually to clean up and control plastic pollution. The cost of waste management has soared, and the health impacts of plastic production continue to harm vulnerable populations.

SB 54 is designed to return us to a truly “free market,” where the full lifecycle costs are reflected in the product price and managed in a harmonized way across California, dramatically increasing efficiencies and saving money. The law promises better recycling systems, stronger environmental and public health protections, and lower long-term costs for consumers.

Despite the law’s strong foundation, the current draft regulations are less fair to businesses by giving gross exceptions to entire categories of packaging leaving others to pay the bills, threatening to unravel SB 54’s potential to reduce plastic pollution, hold producers accountable, and build a circular economy.

Rulemaking Concerns Outlined By NSAC

1. SB 54 Was a Deal—Now Industry Wants Out

SB 54 was a historic compromise between environmental advocates, producers, and legislators. Industry leaders backed the bill in 2022 to avoid a ballot initiative. The three signers of the proposition agreed to pull the ballot measure because we had full industry agreement to support and lobby the bill as written.

Now, some of those same industry players are pressuring the Governor’s office to weaken the rules through sweeping exemptions and delays. They are flip-floppers. They are breaking the contract they made with those of us negotiating the bill. They are abusing their power. If these changes move forward, they undermine the integrity of both SB 54 and - basically EPR for packaging laws nationwide.

2. Local Governments Were Not the Target

Again, the entire point of passing SB54 was to shift most costs away from what I call the “backend” of the system, which is local governments, to the “front end” being the producers who make the decisions and the profits. The draft regulations allow for fines up to $50,000 per day on local governments that fail to meet SB 54 requirements. That’s a direct contradiction of the law’s intent. That $50K was what we first used in SB 212, our landmark Pharma EPR bill where we knew pharma companies needed a big hammer! This was definitely not a reasonable number for local governments whose only prescribed job in SB54 is to collect all the items on the state’s recyclability list in their blue bins.

SB 54 was designed to relieve cities and counties and thus ratepayers and taxpayers from the cost of managing packaging waste—not shift penalties to them. Producers, who control packaging design and materials and deep pocketbooks, should have the bigger fining amounts otherwise, they just don’t do the work and simply pay the fine. Local governments were never the target of the bill – it was intended to provide them with relief.

3. New Packaging Exemptions Break the Law’s Promise

The proposed rules exempt large categories of packaging, including:

Food packaging regulated by USDA and FDA
Over-the-counter (OTC) drugs

These exemptions are not in the legislation—and they will create massive loophole if enacted. Without correction, SB 54 could become unworkable and underfunded.

“The gaping hole that the new exemptions have blown into the bill make it unworkable, practically unfundable, and antithetical to its original purpose of reducing plastic waste,” said Heidi Sanborn, Executive Director of NSAC, in an interview with the Los Angeles Times. (Read the article)

4. Refill and Reuse Claims Need Real Standards

Refill and reuse systems are a critical pathway to reducing single-use packaging. NSAC supports simplified rules—but only if they include enforceable safeguards.

The current draft lacks backstops to prevent misleading reuse claims. Without changes, greenwashing will thrive, eroding public trust and undermining waste prevention goals.

5. Delaying Eco-Modulated Fees Undermines Reform

Eco-modulated fees—which charge producers more for harder-to-recycle packaging—are essential to driving smarter design. Yet the draft proposes a two-year delay in this core accountability mechanism.

NSAC supports an effort to simplify the eco-modulation fee schedule but not a full postponement. If the governor wants to reduce costs, the most elegant way to do that is to send a financial signal to costly packaging producers that they will pay the full freight of the cost to manage those packages.

6. Removing Competition in Producer Responsibility Is a Mistake

SB 54 allows for multiple Producer Responsibility Organizations (PROs) after the initial launch. Competition is vital to:

Prevent monopolies
Encourage innovation
Reduce system costs

CalRecycle's proposed deletion of this section undermines the free-market principles embedded in the law TO REDUCE SYSTEM COSTS!

SB 54: What the Media and Long-time Industry Insiders Are Saying

Recent media coverage highlights the mounting tension between industry approval and environmental warnings about CalRecycle’s draft regulations:

Sen. Ben Allen on Regulatory Overreach

“Notably, it appears the proposed draft regulations exempt certain products that are clearly in the program’s scope. We also worry the draft regulations are now written to allow producers to use polluting technologies in violation of the law,” said Senator Ben Allen, author of SB 54. “Getting these provisions right continues to be a top priority for us as we continue to engage in this process.”

Sen. Allen’s words reinforce NSAC’s concerns: regulatory exemptions and loopholes threaten to derail the intended efficacy and fairness of SB 54.

CalRecycle Director Zoe Heller on the Process Ahead

CalRecycle Director Zoe Heller described the ongoing rulemaking as “a wild ride” and made it clear that significant changes are still needed:

“While I can see we did some things well, there’s some components of our regulations that are still going to need work before we can initiate the formal rulemaking process,” Heller said. “The goal in the coming weeks is to review comments, identify where we can make some tweaks, and hopefully start initiating this formal process soon.”

Her statement suggests CalRecycle is listening—but now the agency must act.

Recent Media Perspectives

Packaging Dive (May 30): SB 54’s regulatory scope may be weakening. Senator Ben Allen raised alarms that the proposed regulations exempt products clearly intended to be covered, and could allow polluting technologies that violate the law’s intent. Read more →
Packaging Dive (June 4): CalRecycle signals more work is ahead. The agency acknowledged that several components of the draft regulations still need revision before formal rulemaking can begin, reflecting ongoing uncertainty. Read more →
Plastics News: Industry praises the draft while environmentalists sound the alarm. Some see the revisions as favorable to producers, while advocates warn Governor Newsom’s administration is diluting the law under corporate influence. Read more →
Los Angeles Times: Regulations now seen as “more corporate-friendly.” The article features NSAC’s Heidi Sanborn warning, “The gaping hole that the new exemptions have blown into the bill make it unworkable, practically unfundable, and antithetical to its original purpose.” Read more →
Resource Recycling cited concerns from the California Advisory board, including feelings of frustration, disappointment, and questions about what exactly the governor wanted changed in a new draft. Board member Wes Carter, president of Atlantic Packaging noted, “it would be difficult to be effective in the second round of rulemaking without specifics on ‘what, in particular’ they are concerned about.” Read more →

NSAC’s Recommendations for CalRecycle and Policymakers

NSAC has submitted formal public comments, joining a growing bipartisan coalition of 23 California legislators, urging CalRecycle to realign the regulations with the law as written.

Read our full comment letter

Be Part of the Solution: Join Us!

The fight to protect and fully implement SB 54 is far from over—and we need engaged, solutions-oriented stakeholders at the table.

NSAC convenes a diverse SB 54 Working Group of local governments, recyclers, producers, NGOs, and policy experts. Since January 2023, this group has helped shape thoughtful, detailed comments on every draft of the regulations—ensuring CalRecycle hears directly from those on the ground.

Want to help fix the flaws, close the loopholes, and build a stronger circular economy in California and beyond? Do you want to help us get the truth out about Whose Costs Count? Do yours count? We soon shall see. Join our SB 54 Working Group and be part of the coalition that's working to make this law what it was meant to be.