The case for circularity and zero-waste supply chains in California just became a lot more compelling. Shifting from a linear (take-make-waste) supply chain to a zero-waste / circular supply chain takes time. Actions taken today will help mitigate (partially or fully) the costs that are required to be set per California’s SB-54.
The direct and indirect costs associated with SB-54 enforcement for producers with more than $1 million in sales are detailed across several areas in the provided regulatory impact document:
1. Direct Costs Overview
- Total Direct Costs: $36.3 billion over the 10-year implementation period, averaging approximately $3.6 billion annually (10/11/2024 Standard Regulatory Impact Assessment)
- Circular Economy Fund: $76.8 million allocated to support staffing and regulatory enforcement through CalRecycle, starting from FY 2026-27 (10/11/24 Standard Regulatory Impact Assessment)
- PRO Fees and Operations: The Producer Responsibility Organization (PRO) will need to collect and manage funds, including a $500 million annual environmental mitigation fee from July 1, 2027, to 2037 (10/11/24 SRIA).
2. Indirect Costs and Compliance Pathways
- Shifting to Compliant Packaging: Producers must redesign packaging to meet the recycling or compostable standards by 2032, incurring design and engineering expenses.
- Staffing and Auditing: Companies will bear costs related to reporting, recordkeeping, audits, and adapting to infrastructure changes needed for compliance.
- Supply Chain Adjustments: Producers are required to reduce plastic use by 25%, with at least 10% through reusable or refillable systems, increasing operational complexity (10/11/24 SRIA).
3. Potential Enforcement Penalties
- Non-Compliance Penalties: Up to $50,000 per day may be imposed for violations under the SB-54 compliance framework
Preview the CalRecycle Report here: