Circular Action Alliance cut its first-year budget for SB 54 by as much as $765 million in the final program plan it submitted to CalRecycle on Oct. 13.
The plan sets a 2027 budget of $1.105 billion, down from as much as $1.87 billion in the June draft. The five-year budget now ranges from $7.81 billion to $13.05 billion, compared with $9.35 billion to $17.2 billion in the draft.
By CalRecycle’s calculation, even PET and HDPE bottles, jugs and jars are more than 10 percentage points short of the 30% plastic recycling rate SB 54 requires in 2028. CAA said it will seek temporary exemptions for many plastic types while it works to increase collection.
More than 4,000 producers have registered with CAA, according to the plan. CalRecycle can now approve, reject or conditionally approve the plan, based on whether it meets state requirements for implementation by Jan. 1, 2027.
The submission “marks a major step forward in establishing a compliance pathway for producers,” Shane Buckingham, CAA chief of staff, said in a statement.
Follow the money
Statutory obligations account for more than half of 2027 spending, according to the plan. That includes the $500 million annual payment to the Plastic Pollution Mitigation Fund, $50 million in regulatory costs and $50 million for a closure and transfer fund.
| Category | 2027 | Five-year total (2027–31) |
| Regulatory-driven, incl. $500M mitigation fund | $600M | 2.84B–3.12B |
| Material management | $155M | 1.95B–3.75B |
| Administrative | $119M | 528M–715M |
| Other operational (end markets, reuse, pilots) | $86M | 1.36B–3.66B |
| Program operating reserves | $80M | 400M–800M |
| Education, outreach and contamination reduction | $65M | 740M–924M |
| Total | $1.105B | 7.81B–13.05B |
Source: CAA California Program Plan, Ch. 8, Table 1. Line items may not sum due to rounding.
The 2027 figure is a 50/50 forecast, meaning CAA assumes an equal chance of over- or underspending. Later years carry low and high scenarios based on managed tons, reimbursement levels, system performance and investment needs. CAA will update budgets and fees each year.
Among the line items are:
• a MRF capital investment fund capped at $100 million in 2027 and $100 million to $175 million a year after, sized from CAA outreach to 94 MRFs;
• curbside service for 5,000 new rural households in 2027, rising to about 80,000 by 2031;
• separate film collection for 5% to 20% of households and at 2,000 to 4,000 large commercial sites over five years; and
• reuse conversions at 3,000 to 10,000 venues, mostly K-12 schools and quick-service restaurants.
Plan revenue cannot pay civil penalties, lobbying or litigation costs against the state. CAA said it will maintain a separate fee mechanism to cover administrative, legal and other organizational costs outside the plan budget.
Producer costs
Proposed 2027 base fees range from 1 cent per pound for aluminum non-aerosol containers to 30 cents per pound for PVC and polystyrene film. The rates take effect only if CalRecycle approves the plan.
Plastic film and flexibles sit at the top of the schedule, mostly 24 cents to 30 cents per pound. PET bottles, jugs and jars come in at 12 cents to 13 cents. HDPE bottles run 10 cents to 13 cents. Cardboard is 3 cents and glass bottles 2 cents.
Plastic components carry three more charges: a 3-cent-per-pound reuse investment fee, a 26-cent-per-pound mitigation fund fee and a tenth of a cent per component.
The mitigation fund fee splits each producer’s share 80% by plastic weight and 20% by component count. CAA said it weighted components lower because de minimis and exclusion rulings remain unsettled. If those rulings shrink component counts, the per-component fee will rise.
To reach SB 54’s 25% plastic source reduction target by 2032, CAA proposes paying producers bonuses for cutting plastic, using recycled content and switching to reuse and refill. A malus on all virgin plastic funds them. CAA estimates the malus at $100 per ton in 2027, $150 in 2028 and $200 in 2029.
Bonuses start at $500 per ton for reductions against a 2026 baseline and $1,500 per ton against a 2023 baseline. CAA said the malus is designed to be revenue-neutral over the plan period. A cap-and-exchange system remains possible, but only if it would materially improve equitable progress toward the targets.
CAA sorted every covered material into one of three paths: maintain and strengthen, phase in, or phase out. Materials in the last group show no reasonable path to the identified targets and must be discontinued in California, as SB 54 requires.
The plan acknowledges that “not all materials will be viable to bring into the system” by the law’s deadlines. Only CAA can file unique challenges exemption applications. Each must include evidence of the challenge, the duration sought, interim milestones and success metrics.
Film draws the most attention. The draft’s approach to cartons and film drew a warning. The final plan adds that recovering post-consumer film will take packaging design changes as well as more sorting. CAA said it will work with producers to raise verified recycled content in stretch and shrink film.
A shifting foundation
CalRecycle’s statewide needs assessment was published in February 2026. Final implementing regulations, which SB 54 required by Jan. 1, 2025, were not approved by the Office of Administrative Law until May 1, 2026. CAA called it a 16-month delay.
CalRecycle approved the permanent SB 54 regulations after withdrawing an earlier draft in January for review. CAA had already launched producer reporting in September 2025, without final rules in place.
The organization filed its draft plan with the Packaging Producer Responsibility Advisory Board on June 15. A 60-day public comment period closed Aug. 14. The advisory board took live comment at meetings over the summer and sent written comments Aug. 12.
CAA received 2,401 comments from 213 individuals representing 201 organizations.
Commenters included local jurisdictions, trade associations, nongovernmental organizations, tribal representatives, producers and the advisory board, CAA said. Emily Coven, CAA California executive director, said in a statement that the public input strengthened the plan.
CAA revised its sections on environmental justice, reimbursement, materials strategy, responsible end markets, budget development and fee-setting. The budget and fee chapters were expanded with more detail on proposed investments, anticipated costs and fee-setting methodology.
CAA invoiced early fees in August 2026 to recoup part of its start-up costs. The remaining $33 million is included in the 2027 budget.
Legal tracks
The final plan comes as SB 54 lawsuits chug along.
Oceana, the Natural Resources Defense Council and Californians Against Waste Foundation sued CalRecycle in San Francisco Superior Court on June 2. The organizations allege the final regulations exclude large categories of plastic packaging, allow indefinite exemptions and fail to guard against technologies the law was meant to restrict.
In addition, a coalition of 17 Republican attorneys general led by Nebraska filed suit in federal court June 22. The National Association of Wholesaler-Distributors (NAW) joined as the sole business plaintiff.
The plaintiffs amended their complaint and sought a preliminary injunction in August, arguing SB 54 is unconstitutionally vague.
The plan addresses the uncertainty directly. An “Unforeseen Circumstances” section states that implementation is subject to legislative, regulatory, judicial and administrative developments beyond CAA’s control.
Only new and additional costs incurred after Jan. 1, 2023, qualify. Costs that would have happened anyway, are paid by another program, are offset by savings or revenue or don’t involve covered materials are excluded.
Applicants choose one of two tracks:
• standard-rate funding, which offers predetermined flat rates for common projects, adjusted for local labor costs and route density; or,
• actual or modeled cost is required for complex projects, including new materials recovery facilities and MRF rebuilds.
CAA reimburses after costs are incurred by default. Upfront payment is described as “limited and conditional.”
Claims for costs incurred before Jan. 1, 2027, must be submitted by May 31, 2028. After that, applications are due May 31 each year for payment the following calendar year.
No project may violate an existing franchise agreement. Each approved applicant must sign a California Funding and Services Agreement covering insurance, reporting, audits and dispute resolution. A draft of that agreement is open for public comment through Oct. 24, according to CAA’s California page.
End markets
CAA is developing a national responsible end market verification standard with an ANSI-accredited body. The organization expects it to be finalized in the second half of 2027.
Until then, an interim verification program applies, covering legal compliance, labor and safety, environmental soundness, yield and the export of mixed plastic waste. Third-party verification bodies will audit end markets and report pass or fail results to CAA.
Chemical recycling
The final plan also replaced its “technology-agnostic” principle with “technology consideration,” recognizing only end markets whose technologies meet REM requirements. For pyrolysis and other non-mechanical processes, CAA will use mass balance accounting that excludes fuel and energy outputs from recycled material claims.
Non-mechanical recycling projects must meet California’s statutory definition of recycling to qualify. SB 54 excludes combustion, incineration, energy generation and fuel production, except anaerobic digestion of source-separated organics.
Mechanical recycling projects can simply describe their technology. Any project using non-mechanical recycling must complete a detailed questionnaire. It requires a process flow diagram, energy and chemical inputs, residual streams, air emissions, water discharges and an analysis of how close nearby communities sit to identify health impacts. Applicants must also sign an attestation addressing excluded technologies.
Projects with potential negative impacts in or next to an environmental justice community must submit an impact assessment, a mitigation plan and documentation of community consultation. Applicants must disclose community complaints and regulatory violations. CAA said it may deny, suspend or revoke reimbursement, or require additional mitigation.
The $500 million fund
Separate from the program budget, producers must fund the California Plastic Pollution Mitigation Fund at $500 million a year. CAA will collect those fees and remit them to the California Department of Tax and Fee Administration.
Producers must raise $5 billion for the fund over 10 years. Plastic resin manufacturers may contribute up to $150 million a year, which would reduce producers’ share.
CalRecycle will also review the law’s plastic recycling rate targets every two years, beginning in 2026, in consultation with the advisory board. SB 54 requires covered materials to reach a 30% recycling rate by 2028, 40% by 2030 and 65% by 2032.
CalRecycle has 75 calendar days from receipt to act on the plan. Counting from the Oct. 13 submission, that window closes around Dec. 27.
If CalRecycle conditionally approves the plan, CAA will send the agency monthly status updates on meeting the conditions. CAA will post the approved plan within five calendar days and implement it within 90 days of approval, according to the plan.
If approval comes at the end of the review window, that 90-day implementation period would run to late March 2027, past the program’s Jan. 1 start.
Editor’s note: How these rules would work in practice was a recurring theme in Policy Now’s SB 54 Unpacked series, including a look at how REMs and reimbursements remain moving targets and how jurisdictions face a scramble to comply.
