SB-54 Solid waste: packaging and products

SECTION 1.

Section 23671 of the Business and Professions Code is amended to read:

23671.

No (a)  A  beer importer shall not  purchase any beer not manufactured within the state or cause any beer to be transported into the state for sale in the state, unless the out-of-state vendor making shipment of the beer into the state holds a certificate of compliance issued by the department. A certificate of compliance shall be granted when the out-of-state vendor makes a written agreement with the department to furnish to the board, on or before the 10th day of each month, a report on a form prescribed by the board, showing the quantity of beer shipped by the out-of-state vendor to each licensed beer importer in this state during the preceding month. The out-of-state vendor shall further agree that it and its agents and all agencies within this state controlled by it will comply with all laws of this state and all rules of the department with respect to the sale of alcoholic beverages, including, but not limited to, Chapter 12 (commencing with Section 25000) of Division 9, and Section 25509, to the same extent as licensees.

(b)  If any out-of-state vendor, after obtaining the certificate, fails to submit the report or report, fails  to comply with Section 14575 of the Public Resources Code, the  or fails to comply with Chapter 3 (commencing with Section 42040) of Part 3 of Division 30 of the Public Resources Code, the  department may suspend or revoke the certificate of compliance in the manner provided for the suspension or revocation of licenses, and after a hearing which that  shall be held in the City of Sacramento or in any other county seat in this state which that  the department determines to be convenient to the holder of the certificate. No A  fee shall not  be charged for the certificate of compliance compliance,  which shall remain in effect until revoked by the department.

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SEC. 2.

Chapter 3 (commencing with Section 42040) is added to Part 3 of Division 30 of the Public Resources Code, to read:

CHAPTER  3. California Circular Economy and Plastic Pollution Reduction Act

Article  1. General Provisions

42040.

This chapter shall be known, and may be cited, as the California Circular Economy and Plastic Pollution Reduction Act.

42041.

(a) The Legislature finds and declares all of the following:

(1) Annual global production of plastic has reached 335 million tons and continues to rise. The United States alone discards 30 million tons each year. Global plastic production is projected to more than triple by 2050, accounting for 20 percent of all fossil fuel consumption.

(2) Without action, projections estimate that by 2050 the mass of plastic pollution in the ocean will exceed the mass of fish. A study by the University of Exeter and Plymouth Marine Laboratory in the United Kingdom found plastics in the gut of every single sea turtle examined and in 90 percent of seabirds. Additionally, plastic negatively affects marine ecosystems and wildlife, as demonstrated by countless seabirds, turtles, and marine mammals, including, but not limited to, whales and dolphins, dying from plastic ingestion or entanglement.

(3) Based on data from the United States Environmental Protection Agency, Institute of Scrap Recycling Industries trade statistics, and industry news source Resource Recycling, the national recycling rate for plastic is projected to sink from 9.1 percent in 2015 to 4.4 percent in 2018, and could drop to 2.9 percent in 2019. Even in California, less than 15 percent of single-use plastic is recycled.

(4) Before 2017, the United States was sending 4,000 shipping containers full of American waste to China every day, including two-thirds of the state’s recyclable materials. However, China has implemented the Green Fence, National Sword, and Blue Sky policies, severely restricting the amount of contaminated and poorly sorted plastics it would accept. This shift in China’s policy has resulted in the loss of markets for low-value plastic packaging that was previously considered recyclable. That material is now being landfilled or burned.

(5) Additionally, the foreign market for recycled paper has collapsed in the state. Foreign exports of mixed paper fell from over 400,000 tons in the first quarter of 2017 to just 136,000 tons in the first quarter of 2018. The price of mixed paper fell from ninety-five dollars ($95) per ton to just ten dollars ($10) per ton in the same timeframe.

(6) The loss of markets for recyclable material has added huge costs to local programs for the disposal and diversion of material. For many cities, counties, and waste haulers in the state, recycling has turned from a profitable business into an activity that actually costs local governments and solid waste service providers money. These costs are being absorbed by city general funds, by solid waste collectors and processors, or by rate increases on residents for waste collection.

(7) The environmental and public health impacts of plastic pollution are devastating and the environmental externalities and public costs of cleaning up and mitigating plastic pollution are already staggering and continue to grow. Most plastics are petrochemicals made from hydrocarbons derived from fossil fuels. Production of these materials contributes to climate change and furthers the reliance on nonrenewable resources. Litter of these plastics constitutes a form of oil pollution spilling into the oceans and contaminating the environment.

(8) Local governments in the state annually spend in excess of four hundred twenty million dollars ($420,000,000) in ongoing efforts to clean up and prevent plastic and other litter from entering the state’s rivers and streams and polluting the state’s beaches and oceans.

(9) Evidence now shows that even the state’s own food and drinking water sources are contaminated with plastic. Microplastics have been found in tap water, bottled water, table salt, and fish and shellfish from local California fish markets. A growing body of research is finding plastic and associated toxins throughout the food web, including in human blood, feces, and tissues. Exposure to these toxins has been linked to cancers, birth defects, impaired immunity, endocrine disruption, and other ailments.

(10) It is the policy goal of the state that not less than 75 percent of solid waste generated be source reduced, recycled, or composted by the year 2020. However, as of 2017, the state was only on track to reach 44 percent, falling far short of this important goal. Additionally, the state has done little to require businesses to reduce the amount of packaging and single-use product waste they generate in the state.

(11) As the fifth largest economy in the world, California has a responsibility to lead on solutions to the growing plastic pollution crisis, and to lead in the reduction of unnecessary waste generally.

(12) Further, businesses selling products into the state have a responsibility to ensure that their packaging and products are minimizing waste, including ensuring materials used are reusable, recyclable, or compostable. This responsibility includes paying for the cost of the negative externality of recovery for the materials they sell in the state.

(13) In order to substantially reduce local, statewide, and global impacts resulting from the generation and improper disposal of single-use packaging and single-use plastic products and to achieve the state’s 75-percent source reduction, recycling, and reuse goal, all single-use packaging and single-use plastic products should be able to be recycled in the state.

(b) It is the intent of the Legislature that any deposit-based mechanism identified pursuant to subparagraph (B) or (E) of paragraph (2) of subdivision (c) of Section 42050 or implemented as a corrective action pursuant to Section 42061 ensures that consumers can conveniently receive a refund for returning single-use packaging or priority single-use products.

42042.

(a) For purposes of this chapter, all of the following shall apply:

(1) “California circular economy regulatory fee” means the fee imposed by the department pursuant to Section 42080.

(2)

(A) “Packaging” means any separable and distinct material component made partially or entirely of plastic, including, but not limited to, plastic-coated paper or plastic-coated paperboard, paper or paperboard with plastic intentionally added during the manufacturing process, and multilayer flexible packaging, used for the containment, protection, handling, delivery, or presentation of goods by the producer for the user or consumer, ranging from raw materials to processed goods. “Packaging” includes, but is not limited to, all of the following:

(i) Sales packaging or primary packaging intended to provide the user or consumer the individual serving or unit of the product and most closely containing the product, food, or beverage.

(ii) Grouped packaging or secondary packaging intended to bundle, sell in bulk, brand, or display the product.

(iii) Transport packaging or tertiary packaging intended to protect the product during transport.

(iv) Packaging components and ancillary elements integrated into packaging, including ancillary elements directly hung or attached to a product and that perform a packaging function, except both of the following:

(I) A component or element with a de minimis weight or volume, as determined by the department.

(II) A component or element that is an integral part of the product and all elements are intended to be consumed or disposed of together.

(B) “Packaging” does not include either of the following:

(i) Glass packaging.

(ii) Aluminum or steel cans, ends, closures, bottles, and cups, including, but not limited to, aluminum or steel cans with plastic ends.

(3) “Packaging category” means a packaging material category on the list published by the department pursuant to subdivision (c) of Section 42054.

(4) “Priority single-use products” means single-use food service ware made partially or entirely of plastic, including, but not limited to, plastic-coated paper or plastic-coated paperboard, paper or paperboard with plastic intentionally added during the manufacturing process, and multilayer flexible material. For purposes of this paragraph, “single-use food service ware” includes plates, bowls, cups, utensils, stirrers, and straws.

(5)

(A) “Producer” means the person who manufactures the single-use packaging or priority single-use product under that person’s own name or brand and who sells or offers for sale the single-use packaging or priority single-use product in the state.

(B) If there is no person who is the producer of the single-use packaging or priority single-use products for purposes of subparagraph (A) in the state, the producer is the person who imports the single-use packaging or priority single-use product as the owner or licensee of a trademark or brand under which the single-use packaging or priority single-use product is sold or distributed in the state.

(C) If there is no person who is the producer for purposes of subparagraphs (A) and (B) in the state, the producer is the person or company that offers for sale, sells, or distributes the single-use packaging or priority single-use product in the state.

(D) Notwithstanding subparagraphs (A) to (C), inclusive, for beer and malt beverages manufactured outside of the state “producer” means the person named on the certificate of compliance issued pursuant to Section 23671 of the Business and Professions Code.

(E) “Producer” does not include a person that produces, harvests, and packages an agricultural commodity on the site where the agricultural commodity was grown or raised.

(6) “Product category” means a priority single-use product material category on the list published by the department pursuant to subdivision (c) of Section 42054.

(7)

(A) “Retailer or wholesaler” means the person who sells the single-use packaging, product packaged in single-use packaging, or priority single-use product in the state or offers to consumers the single-use packaging, product packaged in single-use packaging, or priority single-use product in the state through any means, including, but not limited to, any of the following:

(i) Remote offering, including sales outlets or catalogs.

(ii) Electronically through the internet.

(iii) Telephone.

(iv) Mail.

(B) “Retailer or wholesaler” does not include an online marketplace that satisfies all of the following:

(i) Is an online or mobile application providing user services and facilitating sales solely from third-party sellers to third-party buyers.

(ii) Does not own any of the inventory for sale on the online marketplace.

(iii) Does not ship or control the distribution, packaging, or transport of any products on the online marketplace.

(iv) Facilitates and permits direct, unhindered communication between the third-party buyer and the third-party seller.

(v) Conspicuously displays the third-party seller’s location.

(vi) Does not determine the price for the product offered on the online marketplace.

(C) Upon notification from the department, an online marketplace, as defined in Section 6041 of the Revenue and Taxation Code, that satisfies all of the criteria in subparagraph (B) shall not allow on the online marketplace the offering for sale, sale, or distribution into the state of, and shall notify its third-party sellers to not offer for sale, sell, or distribute into the state on the online marketplace, single-use packaging, a product packaged in single-use packaging, or a priority single-use product if the single-use packaging, product packaged in single-use packaging, or priority single-use product is identified as noncompliant with this chapter in the notice provided by the department.

(8) “Single-use packaging” means the packaging of a product when the packaging is routinely recycled, disposed of, or discarded after its contents have been used or unpackaged, and typically not refilled by the producer. “Single-use packaging” does not include reusable packaging, as determined by the department pursuant to Section 42052.

(9) “Source reduction” means the elimination of, or net reduction in the amount of, single-use packaging or priority single-use products before creation and includes, but is not limited to, transitioning single-use packaging or a priority single-use product to reusable packaging or a reusable product. Source reduction does not include replacing a recyclable or compostable material with a nonrecyclable or noncompostable material or a material that is less likely to be recycled or composted.

(10) “Supplemental local program” means a program in which a stewardship organization arranges for monthly or more frequent collection of single-use packaging material or priority single-use products covered under its stewardship plan from more than 30 percent of households located in a jurisdiction.

(11) “Unexpended funds” means money in a stewardship organization’s accounts that the stewardship organization is not already obligated to pay pursuant to a contract, claim, or similar mechanism. “Unexpended funds” excludes regulatory fees.

(b) For purposes of this chapter, all of the following shall not be considered single-use packaging or priority single-use products:

(1) Medical products and products defined as prescription drugs and medical devices, as specified in the Federal Food, Drug, and Cosmetic Act (21 U.S.C. Secs. 321(g), 321(h), and 353(b)(1)).

(2) Drugs that are used for animal medicines, including, but not limited to, parasiticide products for animals.

(3) Infant formula, as defined in Section 321(z) of Title 21 of the United States Code.

(4) Medical food, as defined pursuant to Section 360ee(b)(3) of Title 21 of the United States Code.

(5) Fortified oral nutritional supplements used for persons who require supplemental or sole source nutrition to meet nutritional needs due to special dietary needs directly related to cancer, chronic kidney disease, diabetes, or other medical conditions as determined by the department.

(6) Packaging used for a product listed in paragraphs (1) to (5), inclusive.

(7) Packaging used to contain toxic or hazardous products regulated by the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sec. 136 et seq.).

(8) Plastic packaging containers that are manufactured for use in the shipment of hazardous materials and are prohibited from being manufactured with used material by federal packaging material specifications set forth in Part 178 (commencing with Section 178.0) of Subchapter C of Chapter I of Subtitle B of Title 49 of the Code of Federal Regulations.

(9) Beverage containers subject to the California Beverage Container Recycling and Litter Reduction Act (Division 12.1 (commencing with Section 14500)).

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Article  2. Single-Use Packaging and Priority Single-Use Products

42050.

(a)

 (1) Consistent with the policy goal established in Section 41780.01, producers of single-use packaging or priority single-use products shall do all of the following:

(A) Source reduce single-use packaging or priority single-use products to the maximum extent feasible.

(B) Ensure that all single-use packaging or priority single-use products manufactured on or after January 1, 2032, and that are offered for sale, sold, distributed, or imported in or into the state are recyclable or compostable as determined by the department pursuant to Section 42052.

(C) Ensure that all single-use packaging or priority single-use products offered for sale, sold, distributed, or imported in or into the state meet the requirements of Section 42054.

(2) Consistent with the policy goal established in Section 41780.01, the department shall achieve and maintain, by January 1, 2032, through the regulations adopted by the department and implemented by producers pursuant to this chapter, a statewide 75-percent reduction of waste generated from single-use packaging and priority single-use products offered for sale, sold, distributed, or imported in or into the state through source reduction, recycling, and composting.

(b) Before January 1, 2025, the department shall adopt regulations to implement this chapter.

(c) Before adopting the regulations, in order to increase the opportunity for public participation and to receive comments, the department shall do both of the following:

(1) Conduct extensive outreach to stakeholders and to state and local agencies with jurisdiction relevant to this chapter, including, but not limited to, the state’s waste diversion, climate, water quality, public health, and air quality goals, and the state’s toxic substances regulation. This outreach shall include, but is not limited to, convening a series of public workshops throughout the state to give interested parties an opportunity to comment and a series of stakeholder meetings designed to facilitate dialogue between stakeholders representing different interest groups such as local governments, the solid waste and recycling industries, product and packaging manufacturers, retailers and wholesalers, trade associations, agriculture, environmental justice, and environmental organizations. These meetings shall be held throughout the state to increase the opportunity for participation and shall inform the development of regulations pursuant to this section.

(2) Identify and evaluate all of the following for potential inclusion in the regulations:

(A) Incentives and policies to maximize and encourage in-state manufacturing using recycled material generated in the state and the development of reusable packaging and products.

(B) Economic mechanisms to reduce the distribution of single-use packaging and priority single-use products or to transition single-use packaging and priority single-use products to reusable alternatives and increase the recyclability or compostability of single-use packaging and priority single-use products. These economic mechanisms may include, but are not limited to, allowing producers to establish and operate a collection and deposit program, assess a generation-based fee, an advanced recycling fee, pay as you throw fees, minimum recycled content requirements, or extended producer responsibility for single-use packaging and priority single-use products.

(C) Means of avoiding the litter, export, or improper disposal of single-use packaging, priority single-use products, and other materials likely to harm the environment or public health in the state or elsewhere in the world.

(D) Clear and easy-to-understand labeling requirements regarding the recyclability, compostability, or reusability of packaging and priority single-use products, consistent with Section 42052. Labeling requirements may include criteria for packaging to be labeled “recyclable,” “compostable,” “reusable,” or “refillable” based on factors including, but not limited to, whether the packaging or product can be readily recycled, composted, or reused and whether the packaging or product is likely to contaminate other recyclable or compostable material, complicate processing, or mislead consumers. In developing labeling requirements, the department shall consider national and international labeling standards and systems and ensure that products labeled “compostable” or “home compostable” meet industry standards to ensure that the products are distinguishable upon quick inspection by consumers and solid waste processing facilities.

(E) Options for producers to comply with the requirements of this chapter and reduce packaging and product waste, including, but not limited to, through implementation of effective and convenient take-back opportunities, deposit systems, reusable and refillable delivery systems, designing for recyclability or compostability, advanced disposal fees, incentive programs, or similar mechanisms. The department may allow producers to implement extended producer responsibility programs, where appropriate, consistent with the requirements of Article 4 (commencing with Section 42070) and Section 40059. The department, to the maximum extent feasible, shall consider mechanisms to encourage using the network of solid waste collection programs and solid waste facilities providing services, with fair reimbursement for the existing operators.

(F) Actions identified through the California Ocean Litter Prevention Strategy and the Statewide Microplastics Strategy.

(G) Criteria for the source reduction requirements specified in subdivision (a) and to inform the checklist specified in paragraph (3) of subdivision (i). Consideration shall include reducing weight, volume, and quantity of single-use packaging and priority single-use product material in a way that does not decrease the ability of the material to be recycled, composted, or reused.

(H) Minimum postconsumer recycled content requirements for a packaging or product category, where appropriate, in order to create or enhance markets for recycled material.

(I) Mechanisms to address technological innovations and new packaging materials or categories.

(J) Requirements to ensure single-use packaging and priority single-use products protect health and safety, consistent with, but not limited to, Chapter 6 (commencing with 42370), Chapter 55 (commencing with Section 69501) of Division 4.5 of Title 22 of the California Code of Regulations, and the regulations adopted pursuant to Article 10.4 (commencing with Section 25214.11) of Chapter 6.5 of Division 20 of the Health and Safety Code.

(K) Opportunities to improve and expand waste collection and processing capabilities and infrastructure, including, but not limited to, the use of innovative new recycling and reuse technologies and secondary material recovery facilities.

(L) Opportunities to harmonize local waste, recycling, and composting programs among local jurisdictions and encourage cooperation and standardization of programs.

(M) Opportunities for encouraging the use of reusable packaging and products.

(N) Opportunities for public education efforts to increase recycling and composting of single-use packaging and priority single-use products and reducing litter from these items.

(O) Potential end-use markets for collected materials and policies required to stimulate domestic markets.

(P) Opportunities for incentivizing and increasing consumer recycling, composting, and reuse.

(Q) Methods for identifying and conducting outreach to producers.

(R) Opportunities to reduce transport packaging waste while minimizing shipping and storage damage.

(d) The department shall determine, and the regulations shall clearly specify, the packaging categories and the priority single-use products that are considered plastic for purposes of this chapter. In making this determination, the department shall include, but not be limited to, both of the following:

(1) Any synthetic material formed by the polymerization of substances into various forms, including, but not limited to, solid, semisolid, porous, flexible, rigid, crystalline, semicrystalline, soluble, or amorphous, including elastomers and fibers, as those terms are defined by the department.

(2) Any synthetic additives or coatings used in the manufacture of fiber packaging or products.

(e) The department shall establish a baseline for the 75-percent waste reduction requirement in subdivision (a) for each packaging and product category based on waste characterization studies undertaken by the department, and any other information received by the department.

(f)

(1) The department may identify single-use packaging or priority single-use products that, while determined to be single use for purposes of this chapter, present unique challenges in complying with this chapter.

(2) For any packaging or products identified as presenting unique challenges, the department may at any point develop a plan to phase the packaging or products into the regulations.

(g) The department shall ensure that any regulations adopted pursuant to this chapter account for guidelines and regulations issued by the United States Food and Drug Administration and the United States Department of Agriculture.

(h) If the department determines at any point that a type of single-use packaging or priority single-use product cannot comply with this chapter due to health and safety reasons, or because it is unsafe to recycle, the department may exempt that packaging or product from this chapter.

(i)

 (1) The department’s regulations shall include direct source reductions of single-use packaging and priority single-use products to the maximum extent feasible, in accordance with this section.

(2) The department may consider single-use packaging and priority single-use product reductions achieved by a producer before the effective date of the regulations toward a producer’s compliance with this chapter if the producer can demonstrate to the satisfaction of the department that the producer reduced the single-use packaging or priority single-use product in a manner consistent with this chapter and actions taken to comply with Chapter 5.5 (commencing with Section 42300).

(3)

 (A) The department shall develop a checklist of source reduction measures, and a producer that complies with all applicable measures on the checklist shall be in compliance with the requirement to source reduce to the maximum extent feasible pursuant to subdivision (a). The department shall also offer guidance on how to use the checklist as a means of complying with subdivision (a). The checklist measures may include, but are not limited to, right-sizing packaging, eliminating excess packaging, compliance with internal or third-party certified packaging design guidelines, concentrating a product to reduce packaging, and transitioning to reusable alternatives where those alternatives are readily available. The department may determine the checklist measures that apply to each producer to achieve the requirements of this subdivision based on packaging or product category.

(B) To determine which source reduction measures to include in the checklist, the department shall consider which single-use packaging and priority single-use products are prone to become litter, have readily available alternatives, make up a significant or problematic portion of the waste stream, or are single-use packaging or priority single-use products for which there has been established, or for which there is the potential for, recycling or composting infrastructure.

(C) The checklist shall incorporate considerations that assist the department in evaluating whether it is feasible for a producer to implement one or more of the checklist source reduction measures, including product protection and integrity, consumer safety, shelf life, compatibility with distribution systems, and other relevant factors as the department deems appropriate.

(4) When establishing the source reduction measures, the department shall avoid incentivizing substitutions that may have a more substantial negative impact on the environment and shall ensure the single-use packaging or priority single-use product remains recyclable or compostable.

(5) If the department believes a producer has not met its obligation to source reduce to the maximum extent feasible or if the department believes additional source reduction is feasible when the producer believes it is not, then the producer shall be given an opportunity to explain any relevant factors that would limit its ability to meet its obligation or implement additional source reduction measures.

(j) In developing the regulations, the department shall consider relevant information on reduction programs and approaches in other states, localities, and nations, including, but not limited to, the European Union, India, Costa Rica, and Canada, and international standards, including, but not limited to, ISO 18602.

(k) In adopting regulations pursuant to this section, the department shall consider and avoid disproportionate impacts to low-income or disadvantaged communities.

(l)

(1) The department shall not impose a recycled content requirement or any other requirement in direct conflict with a federal law or regulation, including, but not limited to, laws or regulations covering tamper-evident packaging pursuant to Section 211.132 of Title 21 of the Code of Federal Regulations, laws or regulations covering child-resistant packaging pursuant to Part 1700 of Subchapter E of Chapter II of Title 16 of the Code of Federal Regulations, regulations, rules, or guidelines issued by the United States Department of Agriculture or the United State Food and Drug Administration relevant to packaging agricultural commodities, requirements for microbial contamination, structural integrity, or safety of packaging under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 301 et seq.), 21 U.S.C. Sec. 2101 et seq., the federal FDA Food Safety Modernization Act (21 U.S.C. Sec. 2201 et seq.), the federal Poultry Products Inspection Act (21 U.S.C. Sec. 451 et seq.), the Federal Meat Inspection Act (21 U.S.C. Sec. 601 et seq.), or the federal Egg Products Inspection Act (21 U.S.C. Sec. 1031 et seq.), or the regulations, rules, or guidance issued pursuant to those laws.

(2) Before the department may impose a recycled content requirement or any other requirement on film packaging that controls the oxygen and carbon dioxide ratio of freshly cut produce, the department shall first consider how much organic waste will be generated by the requirement.

(m)

(1) The department shall develop criteria for exemptions from the requirements of this chapter for small producers, small retailers, and small wholesalers based on size, revenue, number of retail locations, and market share.

(2) In developing the criteria, the department shall exempt producers, retailers, or wholesalers that, in the most recent calendar year, had gross sales of less than one million dollars ($1,000,000) in the state.

(3) If the department determines that exempting a particular small producer, small retailer, or small wholesaler hinders the ability of a packaging or product category from complying with the requirements of this chapter, the department may determine that the particular small producer, small retailer, or small wholesaler will not be exempted from the requirements of this chapter.

(n) The department shall establish criteria for allowing producers to comply with the requirements of this chapter through contractual arrangements with third parties that do not otherwise meet the definition of producer in subparagraph (A) of paragraph (5) of subdivision (a) of Section 42042. The criteria shall not limit the department’s ability to enforce or otherwise implement this chapter.

(o) In developing the regulations, the department shall evaluate, consider, and account for the recycling characteristics of both of the following:

(1) Postcommercial waste streams.

(2) Postresidential waste streams.

42051.

(a)

(1) The department may adopt emergency regulations to implement and enforce both of the following:

(A) Section 42051.5.

(B) Subdivisions (c) and (d) of Section 42054.

(2) This subdivision shall not apply on and after January 1, 2024.

(b) Emergency regulations adopted pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and for the purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of these regulations is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health, safety, and general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, any emergency regulations adopted by the department pursuant to this section to implement and enforce Section 42051.5 or subdivisions (c) and (d) of Section 42054 shall be filed with, but not be repealed by, the Office of Administrative Law and shall remain in effect for a period of two years or until revised by the department, whichever occurs sooner.

42051.5.

(a)

 (1) The department shall, through adopting regulations, require producers, retailers, and wholesalers to register with and report to the department.

(2) The department’s regulations shall establish appropriate timelines to begin regular reporting following the adoption of the regulations. The department shall consider the amount of information being reported in developing the timelines. Reporting requirements shall not be more frequent than quarterly.

(3) Data requests by the department shall be consistent with the categorizations of packaging or product categories established and posted on the department’s internet website pursuant to subdivision (c) of Section 42054.

(4) The department shall require data to be reported using the metric system.

(5) The department shall allow a producer in compliance with this chapter to submit one annual report and make a single annual payment of the California circular economy regulatory fee if the producer does not represent more than 1 percent of the total market share of any packaging or product category or if the producer’s projected California circular economy regulatory fee for a calendar year totals less than fifteen thousand dollars ($15,000).

(6)

(A) The department shall seek to use records and information that the producer, retailer, or wholesaler already maintains, to the maximum extent feasible, in order to ensure that the reporting and recordkeeping requirements are the least burdensome option while still allowing the department to determine compliance with this chapter.

(B) The department shall, to the extent feasible, make the reporting consistent with other recognized third-party reporting systems used by producers.

(7) Except as specified in Section 42083, any confidential or proprietary market-sensitive data received by the department pursuant to this chapter shall be held confidentially by the department as required by Section 40062 and any implementing regulations.

(8) The department shall create an online registration form to facilitate submitting reports pursuant to this subdivision. Consistent with existing authority, the department may contract with an independent third-party online reporting system with recognized standards for waste characterization, source reduction, and recycling.

(b) A producer shall register with the department and do all of the following:

(1) Report data to the department, such as the aggregated quantities and total weight of single-use packaging or priority single-use products by packaging or product category manufactured, offered for sale, sold, distributed, or imported in or into the state, that the department deems necessary to determine compliance with this chapter in a form, manner, and frequency determined by the department pursuant to subdivision (a).

(2) Respond to a request for data within 90 days if the department seeks additional data.

(3) Maintain records of packaging and product material manufactured, offered for sale, sold, distributed, or imported in or into the state in a form and manner established by the department that the department determines is necessary to determine if the producer is in compliance with this chapter during an audit.

(4) Submit the information required by the department pursuant to subdivision (a).

(c) A retailer or wholesaler shall register with the department and do all of the following:

(1) Report to the department a list of the producers that provide the retailer or wholesaler with single-use packaging or priority single-use products.

(2) Not offer for sale or sell single-use packaging, a product packaged in single-use packaging, or a priority single-use product if the producer of the single-use packaging or priority single-use product is listed as noncompliant for that packaging or product category on the department’s internet website pursuant to Section 42055, commencing 120 days after the date the single-use packaging, product packaged in single-use packaging, or priority single-use product was listed as noncompliant by the department.

(d) In complying with this chapter, a producer, retailer, or wholesaler shall do all of the following:

(1) Upon request, provide the department with reasonable and timely access to its facilities and operations, as necessary to determine compliance with this chapter.

(2) Upon request, provide the department with relevant records necessary to determine compliance with this chapter.

(3) Upon request, provide the department with information necessary to identify the producers that provide the retailer or wholesaler with products packaged in single-use packaging.

(4) Provide required reports and data that are accurate and attested to under penalty of perjury as required by the department.

42052.

(a) In adopting regulations pursuant to Section 42050, the department shall develop criteria to determine whether the packaging or priority single-use products are reusable, recyclable, or compostable.

(b)

(1) For purposes of determining if single-use packaging or priority single-use products are recyclable, the director shall consider, at a minimum, all of the following criteria:

(A) Whether the single-use packaging or priority single-use product is eligible to be labeled as “recyclable” in accordance with the uniform standards contained in Article 7 (commencing with Section 17580) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code.

(B) Whether the single-use packaging or priority single-use product is regularly collected, separated, and cleansed for recycling by recycling service providers.

(C) Whether the single-use packaging or priority single-use product is regularly sorted and aggregated into defined streams for recycling processes.

(D) Whether the single-use packaging or priority single-use product is regularly processed and reclaimed or recycled with commercial recycling processes.

(E) Whether the single-use packaging or priority single-use product material regularly becomes feedstock that is used in the production of new products.

(F) Whether the single-use packaging or priority single-use product material is recycled in sufficient quantity, and is of sufficient quality, to maintain a market value.

(2) For purposes of determining if single-use packaging or priority single-use products are recyclable, the director shall consider the regulations adopted pursuant to Article 10.4 (commencing with Section 25214.11) of Chapter 6.5 of Division 20 of the Health and Safety Code and in Chapter 55 (commencing with Section 69501) of Division 4.5 of Title 22 of the California Code of Regulations.

(3) For purposes of determining if single-use packaging or priority single-use products are recyclable, de minimis amounts of nonrecyclable material of not more than 3 percent of the total weight or volume of the single-use packaging or priority single-use product material is acceptable when the nonrecyclable material is required for the proper delivery, safety, sterility, stability, or use of the product or the product contained within the packaging. If the nonrecyclable material negatively affects the recyclability of the product or packaging, the material shall not be considered de minimis.

(c) For purposes of determining if single-use packaging or priority single-use products are compostable, the director shall consider, at a minimum, all of the following criteria:

(1) Whether the single-use packaging or priority single-use product will, in a safe and timely manner, break down or otherwise become part of usable compost and can be composted in a public or private compost facility designed for and capable of processing postconsumer food waste, food-soiled paper, compostable single-use packaging, and compostable priority single-use products.

(2) Whether the single-use packaging or priority single-use product is certified to meet the ASTM standard specification identified in either subparagraph (A) or (C) of paragraph (1) of subdivision (b) of Section 42356 and adopted in accordance with Section 42356.1, if applicable.

(3) Whether the single-use packaging or priority single-use product is regularly collected and accepted for processing at public and private compost facilities.

(4) Whether the single-use packaging or priority single-use product is eligible to be labeled as “compostable” in accordance with the uniform standards contained in Article 7 (commencing with Section 17580) of Chapter 1 of Part 3 of Division 7 of the Business and Professions Code.

(5) The regulations adopted pursuant to Article 10.4 (commencing with Section 25214.11) of Chapter 6.5 of Division 20 of the Health and Safety Code and in Chapter 55 (commencing with Section 69501) of Division 4.5 of Title 22 of the California Code of Regulations.

(d) For purposes of determining if packaging or a product is reusable or single use, the department shall consider, at a minimum, both of the following criteria:

(1) Whether the packaging or product is conventionally disposed of after a single use.

(2) Whether the packaging or product is sufficiently durable, washable, and intended for multiple refills of the original product to allow for multiple uses.

(e)

(1) In implementing this section, the department may consult with local governments and representatives of the solid waste industry, the recycling industry, the reuse industry, the compost industry, packaging and single-use product manufacturers, and other interested stakeholders to determine if a type of packaging or product is recyclable, reusable, or compostable.

(2) Local governments, solid waste facilities, recycling facilities, and composting facilities may provide information requested by the department pursuant to paragraph (1) to the department.

42053.

(a) In implementing this chapter, the department shall establish a Circular Economy and Waste Pollution Reduction Panel for the purpose of identifying barriers and solutions to creating a circular economy consistent with this chapter. The panel shall be composed of one or more members from each of the following disciplines, with equal representation from each discipline:

(1) Local government.

(2) Waste management.

(3) Environmental health or environmental justice.

(4) Plastic product or packaging manufacturing.

(5) Product or packaging design.

(6) Processors of material to be recycled.

(7) Marine conservation.

(8) Environmental sustainability.

(9) Food contact packaging manufacturing or agriculture.

(10) Compost facility operators.

(b) The department shall appoint all members to the panel on or before January 1, 2022. The department shall appoint the members for staggered three-year terms, and may reappoint a member for additional terms, without limitation.

(c) The panel shall meet as often as the department deems necessary, with consideration of available resources, but not less than twice each year. The department shall provide for staff and administrative support to the panel.

(d) The panel meetings shall be open to the public and are subject to the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code).

(e) The panel shall provide the department with initial recommendations regarding all of the following:

(1) Key barriers and possible solutions to advance the objectives of increasing recovery of packaging and product materials and decreasing the leakage of plastic into the environment no later than one year after the panel’s initial meeting. The department shall consider these recommendations as it evaluates what specific actions may be appropriate to advance the objectives of this chapter.

(2) Key barriers and possible solutions to advance the objectives of reducing the production of virgin material for single-use packaging and priority single-use products and reducing the landfilling of single-use packaging and priority single-use products.

(3) Key barriers and possible pathways toward reusable packaging and products and refillable systems.

(f) The panel may take any of the following actions through written recommendations as the panel deems appropriate:

(1) Advise the department on technical matters in support of the goals of this chapter to create a circular economy and reduce product and packaging pollution.

(2) Advise the department in the adoption of the regulations required by this chapter.

(3) Advise the department on any other pertinent matter in implementing this chapter, as determined by the panel or department.

(g) The panel shall submit written recommendations to the department only if a majority of the panel’s members endorse the recommendation. One or more panel members who do not endorse the recommendation may submit a separate written recommendation to the department reflecting the minority opinion or opinions.

(h) If specific actions taken to meet the requirements of this chapter are disrupting or otherwise adversely affecting the sustained operation or commercial viability of solid waste collection programs, solid waste recycling facilities, or composting facilities providing services in accordance with local solid waste handling requirements, the affected entity may bring this information to the panel for discussion and ask the panel to conduct a preliminary evaluation of the information. If this evaluation demonstrates that specific actions are disrupting or otherwise adversely affecting existing operations, the panel shall submit this concern to the department for further analysis. The department shall analyze the information provided by the panel and any other information provided to the department by the affected entity and shall do both of the following:

(1) Determine whether specific actions taken to meet the requirements of this chapter are disrupting or otherwise adversely affecting the sustained operation or commercial viability of solid waste collection programs, solid waste recycling facilities, or composting facilities providing services in accordance with local solid waste handling requirements.

(2) If the department determines pursuant to paragraph (1) that specific actions are disruptive or otherwise have an adverse effect, take actions, to the extent feasible, to remedy the disruption or adverse effect, including, but not limited to, requiring a change to the stewardship plan causing the disruption or adverse effect or by adopting regulations that further the purposes of this chapter. The department shall include any actions taken pursuant to this subdivision in the subsequent report submitted to the Legislature pursuant to Section 42060.

42054.

(a) Single-use packaging and priority single-use products offered for sale, sold, distributed, or imported in or into the state by a producer shall meet the following recycling rates:

(1) On and after January 1, 2028, not less than 30 percent for single-use packaging and priority single-use products manufactured on or after January 1, 2028.

(2) On and after January 1, 2030, not less than 40 percent for single-use packaging and priority single-use products manufactured on or after January 1, 2030.

(3) On and after January 1, 2032, not less than 75 percent for single-use packaging and priority single-use products manufactured on or after January 1, 2032.

(b)

(1) Commencing in the 2026 calendar year, and every two years thereafter, the department shall review, in consultation with the panel created pursuant to Section 42053, relevant data to assess whether the recycling rate specified in subdivision (a) should be adjusted. The department shall make its determination and rationale available for public review.

(2) If the department determines pursuant to a review under paragraph (1) that current unforeseen and anomalous market conditions, including, but not limited to, recycling infrastructure conditions, warrant an adjustment to the recycling rates required in subdivision (a), the department may impose a higher or lower recycling rate for packaging or product categories subject to both of the following conditions:

(A) The recycling rate specified in subdivision (a) shall not be adjusted by more than 10 percent.

(B) The adjusted recycling rate shall be in effect for no more than two years.

(c)

 (1) Before adopting regulations pursuant to Section 42050, the department shall establish and post on its internet website a list of packaging and product categories of single-use packaging and priority single-use products.

(2) The department may consider material types and forms referenced in waste characterization studies for determining the packaging and product categories.

(d)

(1) The department shall calculate and publish on its internet website the current recycling rates being achieved in the state for each packaging and product category no later than January 1, 2025. These recycling rates shall be deemed to meet the description in subdivision (g) of Section 11340.9 of the Government Code and may be filed by the department pursuant to Section 11343.8 of the Government Code.

(2) In determining a recycling rate, the department may consider data gathered pursuant to any of the following:

(A) Chapter 746 of the Statutes of 2015.

(B) Chapter 6 (commencing with Section 42370).

(C) Chapter 395 of the Statutes of 2016.

(D) Chapter 5.5 (commencing with Section 42300).

(E) Division 12.1 (commencing with Section 14500).

(F) Data voluntarily provided by local jurisdictions.

(G) Data and information received from producers.

(H) Any other relevant data and information received by the department.

(3) The department shall determine and post on its internet website whether each packaging and product category recycling rate complies with the recycling rates required pursuant to this section.

(4) For purposes of determining the recycling rate, the department shall include single-use packaging and priority single-use products that are recycled or composted.

(5) A producer may demonstrate compliance with subdivision (a) or (b) by submitting to the department evidence that the particular type of single-use packaging or priority single-use product meets the applicable recycling rate threshold established in subdivision (a) or (b) by reference to a recycling rate on the department’s list or through another mechanism approved by the department.

(6) The department shall update the list at least every two years and shall regularly, but no less than once every two years, evaluate the list of recycling rates to determine whether the recycling rates are still accurate. After evaluation, the department may amend the list to remove, add, or change recycling rates. The department shall post any updates to the list on its internet website.

(7) A producer that seeks to have a recycling rate included or changed on the list, or a packaging or product category added to the list, may be required by the department to submit data for purposes of the department’s determination of the recycling rate to include on the list.

(8) Development of, publication of, and updates made to the list pursuant to this subdivision are exempt from Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.

42055.

The department shall post on its internet website a list of packaging and product categories that are not in compliance with this chapter for noncompliant producers. The department may provide a list of packaging and product categories for compliant producers. The department shall update the list at least once every six months.

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Article  3. Implementation and Enforcement

42060.

(a) The department shall report to the Legislature every two years its progress in implementing this chapter. Notwithstanding Section 9795 of the Government Code, the report shall be submitted to the relevant policy and budget committees of the Legislature by January 1 of each odd-numbered year.

(b) On or before December 31, 2025, as part of a report submitted pursuant to this section, the department shall report on the potential to subject additional material types and forms to the requirements of this chapter, and provide recommendations on whether to transition or sunset existing state recycling programs.

42061.

(a)

(1)

 (A) The department may issue a notice of violation to and impose an administrative civil penalty not to exceed fifty thousand dollars ($50,000) per day per violation on any entity not in compliance with this chapter or any of the regulations the department adopts to implement this chapter, unless the entity meets the criteria of paragraph (5) of subdivision (a) of Section 42051.5, in which case the civil penalty shall not exceed twenty-five thousand dollars ($25,000) per day per violation.

(B) A violation of Section 42054 shall be determined based on the brand name, package or product form, material class, and package or product size that the department deems is not in compliance.

(C) An entity shall not be eligible to begin accruing penalties until at least 30 days following the notification of violation.

(D) The department shall deposit all penalties collected pursuant to this section into the Circular Economy Penalty Account, which is hereby created. Moneys in the Circular Economy Penalty Account shall be available upon appropriation by the Legislature for purposes that further this chapter.

(2)

 (A) Before determining whether to assess a penalty, the department may allow a producer to develop and submit a corrective action plan to the department detailing how and when the producer will come into compliance with this chapter. Corrective action plans may include, but are not limited to, actions such as shifting production to packaging and product categories that meet the recycling rates required pursuant to Section 42054, no longer offering the single-use packaging or priority single-use product for sale, reaching a minimum recycled content standard set by the department, or establishing a take-back system or deposit fee system for single-use packaging or priority single-use products that would increase the recycling rate of the material. The department shall not assess a penalty and the producer shall not be listed as noncompliant pursuant to Section 42055 if the producer complies with the corrective action plan. A producer may request approval from the department to comply with a corrective action plan or elements of a corrective action plan in cooperation with other producers, regardless of whether the producers are members of a stewardship organization formed pursuant to Article 4 (commencing with Section 42070).

(B)

 (i) The duration of a corrective action plan shall not exceed 24 months. The department may extend a corrective action plan for a maximum of 12 months if the department sets forth steps and a timeline for the producer to achieve compliance with the corrective action plan and if the producer has demonstrated that it has made a substantial effort to comply and that there are extenuating circumstances that have prevented it from complying.

(ii) For purposes of this subparagraph, making a “substantial effort” means taking all practicable actions to comply with a corrective action plan. Substantial effort is not made in circumstances in which the decisionmaking body of a producer has not taken the necessary steps to comply with a corrective action plan, including, but not limited to, failing to provide staff resources or failing to provide sufficient funding to ensure compliance with a correction action plan.

(3) The department, in determining the penalty amount and whether to assess a penalty, shall consider all of the following:

(A) The nature, circumstances, extent, and gravity of the violation or a condition giving rise to the violation and the various remedies and penalties that are appropriate in the given circumstances, with primary emphasis on protecting the public health and safety and the environment.

(B) Whether the violation or conditions giving rise to the violation have been corrected in a timely fashion or whether reasonable progress is being made to correct the violation or conditions giving rise to the violation.

(C) Whether the violation or conditions giving rise to the violation demonstrate a chronic pattern of noncompliance with this chapter or the regulations adopted pursuant to this chapter.

(D) Whether the violation or conditions giving rise to the violation were intentional.

(E) Whether the violation or conditions giving rise to the violation were voluntarily and promptly reported to the department before the commencement of an investigation or audit by the department.

(F) Whether the violation or conditions giving rise to the violation were due to circumstances beyond the reasonable control of the producer or were otherwise unavoidable under the circumstances, including, but not limited to, unforeseen changes in market conditions.

(G) The size and economic condition of the producer.

(b) A producer may offer for sale, sell, distribute, or import single-use packaging or priority single-use products in a packaging or product category that does not meet the recycling rates established pursuant to subdivision (a) or (b) of Section 42054 if the producer demonstrates to the department that the producer has achieved the recycling rates established pursuant to subdivision (a) or (b) of Section 42054 for an amount equal to the producer’s market share of that packaging or product category in the state.

(c)

 (1) The department may audit producers, retailers, and wholesalers including, but not limited to, reports submitted by a producer and demonstrations made by a producer pursuant to Section 42054.

(2) The department shall review an audit for compliance with this chapter and consistency with information reported pursuant to this chapter.

(3) The department shall notify a producer, retailer, or wholesaler of any conduct or practice that does not comply with this chapter or of any inconsistencies identified in the department’s audit.

(4) A producer, retailer, or wholesaler may obtain copies of the department’s audit of the producer, retailer, or wholesaler upon request.

(5) The department shall not disclose any confidential or proprietary information that is included in the department’s audit to the extent that information is protected from disclosure by existing law.

(d) Subdivision (a) does not apply to the requirements of paragraph (1) of subdivision (a) of Section 42054. The department may notify the producer of the failure to comply with the requirements of paragraph (1) of subdivision (a) of Section 42054.

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Article  4. Single-Use Packaging and Priority Single-Use Product Stewardship

42070.

(a) The department shall adopt regulations allowing producers to meet the requirements of this chapter collectively by forming one or more stewardship organizations that adopt a stewardship plan in accordance with this article. A stewardship organization or stewardship plan for single-use packaging or priority single-use products shall not be eligible for approval by the department until the department has adopted those regulations. The regulations shall include all of the provisions of this article.

(b)

 (1) A producer that is a member of a stewardship organization formed in accordance with this article and in compliance with this chapter shall not individually be subject to the requirements of this chapter for the single-use packaging and priority single-use products covered by a stewardship plan, except as specified in the stewardship plan adopted by the stewardship organization and approved by the department in accordance with this article.

(2) A stewardship organization shall not require a producer who is a member of the stewardship organization to report to the stewardship organization single-use packaging or priority single-use products that are either part of another stewardship organization’s stewardship plan or otherwise directly reported to the department by the producer.

(c) In accordance with Section 42080, a stewardship organization formed in accordance with this article may pay the California circular economy regulatory fee on behalf of its members and may require a member to reimburse the stewardship organization for the amount of the regulatory fee paid on behalf of the member.

(d) The department may determine that an existing stewardship organization meets the requirements of this article for purposes of complying with this chapter.

42071.

(a) A stewardship organization formed pursuant to this article shall be an organization that is exempt from taxation under Section 501(c)(3) of the federal Internal Revenue Code of 1986.

(b)

 (1) A stewardship organization formed pursuant to subdivision (a) shall develop and submit to the department a stewardship plan and budget for any source reduction, collection, processing, or recycling of the single-use packaging or priority single-use products that the producers covered under the plan offer for sale, sell distribute, or import in or into the state in an economically efficient and practical manner. The stewardship plan shall be consistent with the regulations adopted pursuant to Sections 42050 and 42070 and shall include the provisions necessary for the department to ensure producers covered under the stewardship plan comply with this chapter.

(2) A stewardship organization formed pursuant to subdivision (a) shall not collect any beverage containers subject to the California Beverage Container Recycling and Litter Reduction Act (Division 12.1 (commencing with Section 14500)).

(c) As a condition of plan approval, the stewardship plan shall meet all of the following criteria:

(1) The plan describes how it will provide for a market for single-use packaging materials or priority single-use products to achieve the requirements of this chapter.

(2) The plan will be implemented in a manner that maximizes, to the extent feasible, the use or expansion of the existing network of solid waste collection programs and solid waste facilities providing services in accordance with local solid waste handling requirements.

(3) The plan demonstrates that activities undertaken pursuant to the plan do not violate existing franchise agreements entered into pursuant to Section 40059 and, if applicable, are in compliance with local laws, rules, and regulations applicable to solid waste handling.

(d)

(1)

(A) If a stewardship plan proposes to implement a supplemental local program, all of the following shall apply:

(i) The stewardship organization shall enter into a memorandum of understanding with the local agency.

(ii) The memorandum of understanding shall establish the terms and conditions of the agreement, describe the activities to be performed, and be approved by the local agency, after a public hearing, by resolution or ordinance.

(iii) A stewardship organization shall not implement a supplemental local program if the local agency declines to enter into a memorandum of understanding.

(B) This paragraph does not require a local agency to enter into a memorandum of understanding with a stewardship organization.

(2) The memorandum of understanding shall include, at a minimum, all of the following:

(A) Provisions to ensure the organization and its agents meet the same labor and environmental requirements that were established in the local agency’s agreement with the previous solid waste collection service provider.

(B) A process to resolve disputes.

(C) Any other provision specified by the local agency, including, but not limited to, a provision allowing the local agency to recover costs associated with entering into and overseeing execution of the memorandum of understanding or a provision relating to termination of the memorandum of understanding pursuant to paragraph (4).

(3) A memorandum of understanding entered into pursuant to this subdivision shall be included by the stewardship organization in an annual report to the department before implementation of the supplemental local program.

(4) The local agency may terminate a memorandum of understanding entered into pursuant to this subdivision.

(5) A memorandum of understanding entered into pursuant to this subdivision shall not abrogate the terms of an existing franchise agreement without the consent of all parties to that agreement.

(6) For purposes of this subdivision, “local agency” has the same meaning as defined in paragraph (2) of subdivision (b) of Section 40059.1.

(e) Within 90 days after approval or conditional approval by the department of the plan, the stewardship organization shall implement the approved plan.

(f) The approved plan shall be a public record, except that financial, production, or sales data reported to the department by the stewardship organization is not a public record for purposes of the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and shall not be open to public inspection. The department may release financial, production, or sales data in summary form so the information cannot be attributable to a specific producer, retailer, wholesaler, or to any other entity.

42072.

(a) A stewardship organization shall keep minutes, books, and records that clearly reflect the activities and transactions of the stewardship organization.

(b) The accounting books of the stewardship organization shall be audited at the stewardship organization’s expense by an independent certified public accountant retained by the stewardship organization at least once each calendar year.

(c) The stewardship organization shall arrange for the audit to be delivered to the department with the annual report required pursuant to Section 42073. The department shall review the audit for compliance with this article and consistency with the stewardship plan adopted pursuant to this article. The department shall notify the stewardship organization of any compliance issues or inconsistencies.

(d) The department may conduct its own audit if it determines that an audit is necessary to enforce the requirements of this article and that the audit conducted pursuant to subdivision (b) is not adequate for this purpose. The stewardship organization may obtain copies of the audit upon request.

(e) The department shall not disclose any confidential or proprietary information in an audit.

42073.

A stewardship organization shall annually submit to the department and make publicly available on its internet website both of the following:

(a) An annual report and budget that describes how the organization’s budget and the organization has complied with the requirements of this chapter and its implementing regulations.

(b) The stewardship organization’s department-approved stewardship plan.

42073.5.

(a) A stewardship organization shall register in the department’s Recycling and Disposal Reporting System and annually submit to the system all of the following information in accordance with the timeframe established in subdivision (b):

(1) The total tons by material type and by jurisdiction of origin for all material sent to a disposal facility, transferor or processor, recycler or composter, or end user.

(2) The contact information or Recycling and Disposal Reporting System number of all receiving facilities or end users.

(3) An estimate of the overall source sector tons or percentages for waste sent to a disposal facility, transferor or processor, recycler or composter, or end user.

(b) A stewardship organization shall report the information specified in subdivision (a) in accordance with the following schedule:

(1) First reporting period due on or before May 31.

(2) Second reporting period due on or before August 31.

(3) Third reporting period due on or before November 30.

(4) Fourth reporting period due on or before February 28.

42074.

(a) The department shall review the annual report and budget for compliance with this article and shall approve, disapprove, or conditionally approve the report and budget within 120 days of receipt of the annual report.

(b) If the department disapproves the annual report or budget, the department shall explain, in writing, how the annual report or budget is noncompliant, and the stewardship organization shall resubmit the report or budget with any additional information, modifications, or corrections to the department within 30 days. If the department finds that the annual report or budget resubmitted by the stewardship organization does not comply with the requirements of this article, the stewardship organization shall not be deemed in compliance with this chapter until the stewardship organization submits an annual report or budget that the department finds compliant with the requirements of this article.

(c) The approved annual report and budget shall be a public record, except that financial, production, or sales data reported to the department by the stewardship organization is not a public record for purposes of the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and shall not be open to public inspection. The department may release financial, production, or sales data in summary form so the information cannot be attributable to a specific producer, retailer, wholesaler, or to any other entity.

42075.

(a) A stewardship organization, as part of its stewardship plan, shall set up a trust fund or an escrow account, into which it shall deposit all unexpended funds for use in accordance with this section if the stewardship plan terminates or is revoked.

(b) If a stewardship plan terminates or is revoked, the trustee or escrow agent of a trust fund or escrow account set up pursuant to subdivision (a) shall do both of the following, starting within 30 days:

(1) Accept payments directly from producers into the trust fund or escrow account that would have been made to the stewardship organization before the plan’s termination or revocation.

(2) Make payments from the trust fund or escrow account as the department shall direct, in writing, to implement the most recently approved stewardship plan.

(c) If a new stewardship plan has not been approved by the department within one year after termination or revocation, the department may make modifications to the previously approved plan, as it deems necessary, and continue to direct payments from the trust fund or escrow account in accordance with paragraph (2) of subdivision (b) to implement the modified stewardship plan.

(d) A trustee or escrow agent in possession of stewardship funds shall, as directed by the department, transfer those funds to a successor stewardship organization with an approved stewardship plan.

42076.

(a) Except as provided in subdivision (c), an action specified in subdivision (b) that is taken by a stewardship organization or its members is not a violation of the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code), the Unfair Practices Act (Chapter 4 (commencing with Section 17000) of Part 2 of Division 7 of the Business and Professions Code), or the Unfair Competition Law (Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code).

(b) Subdivision (a) shall apply to all of the following actions taken by a stewardship organization or its members:

(1) The creation, implementation, or management of a stewardship plan approved by the department pursuant to this article and the types or quantities of single-use packaging or priority single-use products managed pursuant to a stewardship plan.

(2) The cost and structure of an approved stewardship plan.

(3) The establishment, administration, collection, or disbursement of any charges associated with funding the implementation of this article.

(c) Subdivision (a) shall not apply to an agreement that does any of the following:

(1) Fixes a price of or for single-use packaging or priority single-use products, except for an agreement related to costs or charges associated with participation in a stewardship plan approved or conditionally approved by the department and otherwise in accordance with this article.

(2) Fixes the output or production of single-use packaging or priority single-use products.

(3) Restricts the geographic area in which, or customers to whom, single-use packaging or priority single-use products will be sold.

42077.

A court shall award a prevailing party in a civil action brought against a stewardship organization or its agent to enforce a franchise, contract, license, permit, or other authorization granted pursuant to subdivision (a) of Section 40059 reasonable attorney’s fees, expert witness fees, and other costs incurred in the course of the litigation in an amount the court, in its discretion, deems appropriate. A local agency, as defined in paragraph (2) of subdivision (b) of Section 40059.1, is not an agent of a stewardship organization for purposes of this section.

42078.

This article does not authorize the department to require a producer, retailer, or wholesaler to participate in a stewardship organization.

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Article  5. California Circular Economy Regulatory Fee

42080.

(a)

(1) The department shall establish a California circular economy regulatory fee to be paid by a producer in accordance with subdivision (b) and Section 42070. The amount of the fee shall be established and adjusted by the department based on the factors specified in paragraph (3). The department shall set this fee to collect no more than is necessary to cover the reasonable regulatory costs of this chapter for the following fiscal year, including a prudent reserve, as specified in subparagraph (B) of paragraph (3).

(2) A producer shall remit the fee assessed pursuant to this subdivision on a quarterly schedule in accordance with Section 42081. The revenue from the fee shall not be used for activities other than those described in this subdivision.

(3) Before establishing or adjusting the fee, the department shall review at a public hearing all of the following factors:

(A) A projection of the amount necessary to fund only the reasonable regulatory costs incurred by the department and the California Department of Tax and Fee Administration incident to audits, inspections, administrative activities, adjudications, or other regulatory activities associated with single-use packaging and priority single-use products pursuant to this chapter, taking into account any revenue received from entities agreeing to corrective action plans.

(B) The sufficiency of revenues to administer, enforce, and promote regulatory activities regarding single-use packaging and priority single-use products, including the regulatory aspects of the programs established pursuant to this chapter, plus a prudent reserve.

(C) Whether additional revenues are necessary to preserve the ability to conduct regulatory activities necessary to implement this chapter in the following fiscal year.

(D) If the actual regulatory costs incurred by the department and the California Department of Tax and Fee Administration are lower than the projected costs, whether at the end of the fiscal year there remains sufficient revenues to reduce the fee.

(4) An adjustment to the fee shall become effective on January 1 of the year following its adoption.

(5) The department may adopt regulations to establish and adjust the fee. Regulations to establish and adjust the fee shall be deemed to meet the description in subdivision (g) of Section 11340.9 of the Government Code and may be filed by the department pursuant to Section 11343.8 of the Government Code.

(b)

 (1) The amount of the fee imposed on a producer shall be proportionate to the cost of regulating that producer based on whether the producer is complying with this chapter individually or collectively as a member of a stewardship organization. If a producer is a member of a stewardship organization, the stewardship organization may pay the fee on behalf of the producer. A stewardship organization may require a member to reimburse the stewardship organization for the amount of the regulatory fee paid on behalf of the member.

(2) The amount of the fee imposed on a producer shall be proportionate to the cost of regulating that producer based on whether the producer is a producer of single-use packaging or priority single-use products.

42081.

(a) The department shall transmit to the California Department of Tax and Fee Administration the name and address of each producer and stewardship organization responsible for paying the California circular economy regulatory fee, and the name of each producer on whose behalf that organization is paying the fee and the amount of the fee to be assessed, as authorized by this article. The department shall also provide to the California Department of Tax and Fee Administration a contact telephone number for the department to be printed on the California circular economy regulatory fee bill to respond to questions about the fee.

(b)

(1) The California Department of Tax and Fee Administration shall collect the California circular economy regulatory fee in accordance with the Fee Collection Procedures Law (Part 30 (commencing with Section 55001) of Division 2 of the Revenue and Taxation Code), except as specified in paragraphs (2) and (3).

(2) Notwithstanding the appeal provisions in the Fee Collection Procedures Law (Part 30 (commencing with Section 55001) of Division 2 of the Revenue and Taxation Code), a petition for redetermination by a producer or stewardship organization that is based on the assertion that the department improperly or erroneously determined that the producer is subject to the California circular economy regulatory fee, or that the department improperly or erroneously calculated the fee amount, shall be subject to review pursuant to Section 42084 and shall not be subject to a petition for redetermination by the California Department of Tax and Fee Administration.

(3)

(A) Notwithstanding the refund provisions in the Fee Collection Procedures Law (Part 30 (commencing with Section 55001) of Division 2 of the Revenue and Taxation Code), the California Department of Tax and Fee Administration shall not accept any claim for refund that asserts that the department improperly or erroneously determined the amount of the California circular economy regulatory fee, or incorrectly determined that a producer is subject to that fee, unless that determination has been set aside by the department or the court reviewing the determination.

(B) If the department determines that a producer or stewardship organization is entitled to a refund of all or part of the California circular economy regulatory fee, the producer or stewardship organization shall make a claim for refund to the California Department of Tax and Fee Administration pursuant to Chapter 5 (commencing with Section 55221) of Part 30 of Division 2 of the Revenue and Taxation Code.

(C) This section does not prohibit the California Department of Tax and Fee Administration from accepting a claim for refund or taking action on its own to correct a mistake or clerical error.

(c) The California circular economy regulatory fee shall be due and payable 30 days from the assessment issued by the California Department of Tax and Fee Administration.

42082.

(a) Notwithstanding Article 1.1 (commencing with Section 55050) of Chapter 3 of Part 30 of Division 2 of the Revenue and Taxation Code, the California circular economy regulatory fee shall be remitted by a producer or stewardship organization through electronic funds transfer to the California Department of Tax and Fee Administration.

(b) Except for payments of refunds made pursuant to Chapter 5 (commencing with Section 55221) of Part 30 of Division 2 of the Revenue and Taxation Code, all California circular economy regulatory fee payments shall be deposited into the California Circular Economy Fund, which is hereby created in the State Treasury.

(c) Moneys in the California Circular Economy Fund shall be available upon appropriation by the Legislature to the department to fund the regulatory activities of this chapter and to the California Department of Tax and Fee Administration for expenses incurred in the collection of the fee imposed by Section 42080.

42083.

(a) Notwithstanding any other law, upon request by the California Department of Tax and Fee Administration, the department shall fully and timely provide data, including confidential producer, wholesaler, or retailer information, to administer this article.

(b) A person from the California Department of Tax and Fee Administration who receives confidential information pursuant to this section shall not divulge, or make known in any manner not authorized under existing law, any of the confidential information received by or reported to the California Department of Tax and Fee Administration. Confidential information authorized to be provided pursuant to this section shall otherwise retain its confidential status and shall otherwise remain subject to the confidentiality provisions of existing law, including, but not limited to, the confidentiality provisions in this chapter.

42084.

(a) A person who the department determines is required to pay the California circular economy regulatory fee under this article may petition for redetermination of whether this article applies to that person within 30 days after service upon that person of a notice of the determination. If a petition for redetermination is not filed within the 30-day period, the amount determined to be due becomes final at the expiration of the 30-day period.

(b) A petition for redetermination shall be in writing and shall be sent to the department or its designee. The petition shall state the specific grounds upon which the petition is founded and shall include supporting documentation. The petition may be amended to state additional grounds or provide additional documentation at any time before the date that the department issues its order or decision with regard to the petition for redetermination.

(c) If a petition for redetermination is filed within the 30-day period, the department shall reconsider whether the fee is due and make a determination in writing. The department may eliminate the fee based on a determination that this chapter does not apply to the person who filed the petition.

(d) If a timely petition for redetermination has been filed pursuant to subdivision (a), all action to collect the California circular economy regulatory fee shall be stayed pending the final determination of the department pursuant to subdivision (f).

(e) Notice of the determination of the department shall be served, on the same date, to the petitioner and the California Department of Tax and Fee Administration.

(f) The order or decision of the department upon a petition for redetermination of the California circular economy regulatory fee shall become final 30 days after service upon the petitioner of notice of the determination.

42085.

The California circular economy regulatory fee determined to be due by the department pursuant to this article is due and payable at the time it becomes final, and if it is not paid when due and payable, the penalty imposed pursuant to Section 55086 of the Revenue and Taxation Code shall apply.

42086.

(a) Notice required to be served under this article shall be in writing and shall be placed in a sealed envelope, with postage paid, addressed to the recipient at the recipient’s address as it appears in the records of the department. The giving of notice shall be deemed complete at the time of the deposit of the notice in a United States Post Office, or a mailbox, subpost office, substation, mail chute, or other facility regularly maintained or provided by the United States Postal Service without extension of time for any reason.

(b) Notwithstanding subdivision (a), notice required to be served under this article may be served personally by delivering it to the person to be served and service shall be deemed complete at the time of delivery. Personal service to a corporation may be made by delivery of a notice to any person designated in the Code of Civil Procedure to be served for the corporation with summons and complaint in a civil action.

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SEC. 3.

Chapter 6 (commencing with Section 48710) is added to Part 7 of Division 30 of the Public Resources Code, to read:

CHAPTER  6. Local Agency Regulation of Food Packaging Material

48710.

(a) For purposes of this chapter, the following definitions apply:

(1) “Curbside program” means a recycling or composting program that picks up waste material from individual or multiple family residences, or both, with the intent to recycle or compost the waste material, operated by, or pursuant to a contract with, a local agency, or is acknowledged, in writing, by a local agency.

(2) “Grocery store” means a store primarily engaged in the retail sale of canned food, dry goods, fresh fruits and vegetables, and fresh meats, fish, and poultry, and any area that is not separately owned within the store where food is prepared and served, including a bakery, deli, and meat and seafood counter.

(3) “Local agency” means a city, county, city and county, or other local public agency.

(b) A local agency shall not require a grocery store to use a certain type of food packaging for any food sold in the grocery store unless the majority of residential households within the jurisdiction of the local agency have access to a curbside program that accepts the material from which that food packaging is made.

(c) A local agency shall not require a grocery store to use a food packaging container that does not meet an ASTM standard specification, as defined pursuant to subdivision (b) of Section 42356, or the compostability criteria developed pursuant to Section 42052.

(d)

(1) Except as provided in paragraph (2), a local agency shall not enforce or implement an ordinance, resolution, regulation, or rule, or make any amendment to an ordinance, resolution, regulation, or rule, that violates or conflicts with subdivision (b) or (c).

(2) A local agency that, as of September 15, 2020, has an ordinance, resolution, regulation, or rule that violates or conflicts with subdivision (b) or (c) may continue to implement and enforce that ordinance, resolution, regulation, or rule.

(e) This chapter does not prohibit a local agency from requiring a grocery store to use a certain type of food packaging that is refillable or reusable.

(f) This chapter shall remain in effect only until January 1, 2032, and as of that date is repealed.

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SEC. 4.

The Legislature finds and declares that Section 2 of this act, which adds Chapter 3 (commencing with Section 42040) to Part 3 of Division 30 of the Public Resources Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:

In order to protect the proprietary information of producers, retailers, and wholesalers of single-use packaging and priority single-use products, it is necessary that financial, production, and sales data reported by producers, retailers, and wholesalers of single-use packaging and priority single-use products be kept confidential.

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SEC. 5.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

Reference: https://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201920200SB54&showamends=false