On July 2, 2025, California’s Department of Resources Recycling and Recovery (CalRecycle) released draft proposed regulations to implement the Plastic Pollution Prevention and Packaging Producer Responsibility Act (SB 54). The proposed regulations follow three years of rulemaking activities to implement SB 54 and replace regulatory text, which CalRecycle had proposed during its March 2024–March 2025 rulemaking. The proposed regulations also follow feedback from Governor Newsom’s office that the state should balance plastic pollution goals against cost concerns for families and small businesses. CalRecyle’s draft of proposed regulations is now being reviewed by California’s Department of Finance (DOF) as part of a Standardized Regulatory Impact Assessment (SRIA). Once reviewed, the proposed regulations will be released for a 45-day formal rulemaking comment period. The next CalRecycle SB54 Advisory Board meeting is scheduled for August 15, 2025.
Key implications for industrial and business-to-business manufacturers
California’s EPR Program was designed as a solution for managing single-use packaging waste from consumer products and improving California’s municipal waste and recycling infrastructure. California’s EPR Program has therefore focused on packaging materials for brands and products used for consumer or personal, non-business use. Despite this intention, CalRecycle’s proposed regulations, specifically the proposed definition of consumer, add certain ambiguities that have the potential to fundamentally expand the potential for producer responsibility for packaging and plastic food service ware that is sold or distributed in California to strictly business-to-business manufacturers.
BROAD DEFINITIONS MAY ENSNARE INDUSTRIAL AND MANUFACTURING COMPANIES
CalRecycle’s proposed regulations define “producers,” “covered material,” and “consumer” in a way that upstream manufacturers, distributors, and importers may arguably now be a responsible producer, even if these products were not sold directly to or intended for consumers. More specifically, CalRecycle’s proposed regulations anticipate a definition for “consumer” as being “the end user of an item, or the last person in the supply chain who acquires and uses an item. For example, a retailer that obtains and uses a covered material item in its business operations, without selling or otherwise further distributing the item, is the consumer of the item.” The definition does not state that a consumer is a person who purchases goods for personal, non-business use. While, as drafted, the proposed meaning for “consumer” is intended for determining whether packaging and food service ware meet the requirements for “reusable” or “refillable,” the definition for consumer could also be applied to broaden EPR requirements, potentially extending EPR requirements to products meant for distributors, secondary retailers, and businesses.
THE SCOPE OF PACKAGING MATERIAL SUBJECT TO EPR REQUIREMENTS IS EXPANSIVE
CalRecycle’s proposed regulations contemplate EPR requirements applying to most packaging entering the state, including packaging that is used solely in commercial or industrial settings, which is explicitly exempted in most other states’ EPR programs. For example, if “covered materials” is expanded to include “consumers” for business-use, contrary to the plain meaning of the definition of consumer being limited to personal-use items, packaging materials used solely in business-to-business operations may result in industrial and business-to-business manufacturers facing significant exposure for EPR fees related to pallet wrap, shrink film, protective foams, corrugate, and paper.
INDUSTRIAL AND MANUFACTURING COMPANIES MAY BE UNPREPARED FOR EPR REPORTING AND FEE OBLIGATIONS
Once CalRecycle’s regulations are finalized, responsible producers will be subject to registration, reporting, and EPR fee requirements, commencing within 30 days from the effective date. With the shift in key terms and potential broadening of the producer scope, industrial and manufacturing companies, which were previously considered out-of-scope for EPR requirements or exempt, may now have extensive catch up to prepare for pending compliance deadlines.
No changes to SB 54 statutory deadlines or goals
Although further rulemaking activities are needed to clarify EPR requirements and producer expectations, CalRecycle’s proposed regulations had no impact on SB 54’s statutory deadlines and targets. Key legislative goals in SB 54 for ensuring packaging materials and food service ware meet recyclability and compostable criteria within set target dates therefore remain unchanged. Producers are, as a result, expected to continue working toward ensuring that their covered materials are recyclable or compostable by 2032. To meet these target dates, companies may need to be working on product and packaging designs, technology improvements to meet performance standards, or adjust their labeling practices, all of which require extensive time, resources, and costs.
Public comment opportunities
While the proposed regulations are not open for public comment yet, stakeholders can provide feedback to CalRecycle on the draft of proposed regulations now by attending the upcoming Packaging Producer Responsibility Advisory Board Meeting on August 15, 2025. For industrial and business-to-business manufacturers, the Advisory Board Meeting is a good opportunity to raise concerns over the effect of CalRecycle’s proposed definitions for “producers,” “covered material,” and “consumer” removing the previously clear exclusion from EPR requirements when packaging materials are not used for products that reach an end-consumer.
Takeaways
While final regulations are not expected until later in 2025, manufacturers, importers, and distributors should carefully assess their obligations under the proposed regulations. Simple actions that can help include:
PERFORMING AN EXPOSURE ASSESSMENT
Conduct an inventory of packaging materials, trace supply chains, and map packaging uses, even to non-consumer channels, to determine potential EPR obligations.
ENGAGE PUBLICLY
CalRecycle’s comment period is foundational to shaping definitions, regulatory obligations, and potential defenses to EPR liability. The upcoming rulemaking creates the perfect opportunity to give feedback on anticipated EPR compliance challenges and costs.
DEVELOP COMPLIANCE READINESS
As EPR requirements continue to be implemented in California and other states, industrial and manufacturing companies need a strategy for managing their potential EPR obligations and downstream customer expectations. Understanding EPR requirements can help companies manage EPR compliance, customer stewardship expectations, and capture cost saving opportunities.
COORDINATE WITH SUPPLIERS AND CUSTOMERS
CalRecycle’s proposed regulations contemplate widespread responsibility for packaging material use and disposal. Collaborating with suppliers and customers on packaging material data and EPR responsibilities can ensure alignment of data, avoid duplication of efforts, and reduce costs.
Final thoughts
Through CalRecycle’s proposed regulations, California’s EPR Program is poised to be one of the most comprehensive EPR programs in the country, with wide sweeping regulatory implications. Industrial and business-to-business manufacturers cannot assume they are out of scope. Early engagement in stakeholder meetings and public comment periods is essential, not just to prepare for compliance, but to influence a workable regulatory framework, especially for non-consumer-facing sectors.
If you would like assistance assessing your company’s exposure, preparing comments, mapping packaging flows, or implementing compliance measures, we’re here to help. For more information on this content, please contact your Nixon Peabody attorney or the authors of this alert.