California continues to be a leader in sustainability with the passage of a series of laws aimed at increasing diversion, waste reduction and consumer knowledge.

SB 54

In 2022, California enacted Senate Bill 54, or the Plastic Pollution Prevention and Packaging Producer Responsibility Act. SB 54 is an extended producer responsibility law aimed at reducing plastic and packaging waste and shifting the cost of recycling this material from the consumer back to the producer. This is done primarily by establishing a framework for development of a producer responsibility organization, an entity which producers join and pay fees to. The PRO then implements and funds waste management, recycling and reduction practices. Circular Action Alliance was selected as the PRO for California and other states.

Additionally, SB 54 mandates that certain sustainability and plastic reduction thresholds be met in the coming years:

• 25% reduction in all single-use plastic packaging and single-use plastic cutlery, plates, cups and containers by 2032.
• 65% recycling rate for all single-use plastic packaging and the same types of single-use plastic food serviceware by 2032.
• 100% of single-use packaging (including non-plastics like glass, ceramic, metal, paper and fiber, and wood and other organics) and single-use plastic food serviceware must be recyclable or compostable by 2032.

Smaller steps toward these goals are required for the years leading up to 2032. For example, single-use plastic packaging and single-use plastic food ware must be reduced by 10% by 2027 and 20% by 2030. Importantly, the 25% reduction and 65% recycling rate requirements only apply to plastic items, while the general requirement that all single-use packaging be recyclable or compostable by 2032 applies to any packaging material covered by the statute.

In order for producers and the PRO to work toward these requirements, the California Department of Resources Recycling and Recovery, the state agency in charge of implementing SB 54, was tasked with establishing a Covered Material Category list to establish which materials are recyclable and compostable at the requisite levels. CalRecycle released its first CMC list on Dec. 28, 2023, and updated it on Jan. 1, 2025. This list helps producers and the PRO determine which materials will meet California’s standards and which materials they need to phase out.

Over the last few years, industry groups, environmental advocates, regulators, lawmakers and the PRO have been working together to determine how the law will be implemented.

On March 7, 2025, the deadline to finalize regulations for SB 54, Gov. Gavin Newsom told CalRecycle to restart the regulatory rulemaking process for SB 54 due to concerns about the potential costs to businesses and consumers. Now that Newsom has ordered negotiators back to the drawing board, it is unclear how and if broader deadlines in the statute will be met.

As it stands, in California, the first major deadline for producers is Jan. 1, 2027. By this date, producers must both join a PRO and reduce single-use plastic packaging and single-use plastic foodware by 10%. Both the PRO and California lawmakers have stated that the statutory timelines remain in effect despite setbacks for regulations.

SB 343

In 2021, the year before SB 54 was enacted, California adopted SB 343, or the “Truth in Recycling” law. This law seeks to give consumers “accurate and useful information related to how to properly handle the end of life of a product or packaging,” primarily through creating stricter requirements for when companies can use the familiar “chasing arrows” symbol or any other indicator of recyclability on products and packaging.

The law requires a minimum demonstrated level of actual recycling for various materials before they can be labeled as recyclable. To this end, SB 343 directed CalRecycle to conduct research and publish data on the materials collected, sorted, sold or transferred for recycling in California, including whether the materials meet recyclability thresholds. Manufacturers and other interested parties can then use the data to determine whether compliant recyclable claims can be made. CalRecycle published its final Material Characterization Study report on April 4, 2025, and manufacturers are required to comply with labeling requirements based on data in this report starting Oct. 4, 2026.

SB 343 and SB 54 are parallel laws. While SB 343 restricts labeling products as recyclable unless certain threshold levels of recycling are met, SB 54 simultaneously mandates that California work toward meeting those thresholds. Additionally, the CMC list for SB 54 is built from the findings of the SB 343 Material Characterization Study.

Other EPR Laws

Outside of California, other states across the nation are prioritizing waste reduction with their own EPR laws, including:

• Maine: Stewardship program for packaging material, Maine Rev. Stat. § 2146 (2021).
• Oregon: Plastic Pollution and Recycling Modernization Act, SB 582 (2021).
• Colorado: Producer Responsibility Program for Statewide Recycling Act, House Bill 22-1355 (2022).
• Minnesota: Packaging Waste and Cost Reduction Act, HF 3911 (2024).

Key Takeaways

SB 54 and SB 343 set ambitious goals for California, and it is not clear that the state is on track to meet them. Because these laws have important deadlines and milestones in the coming months and years, businesses affected by them should stay informed. Registering with CAA, California’s PRO, can help businesses ensure they are receiving the most current information.

We expect that more state EPR laws will be passed in the near future. Prudent businesses that operate nationally should make sure to keep up with these laws to remain compliant in this ever-changing landscape. Competent environmental counsel may be required to navigate these innovative laws.

Sedina L. Banks, Sherry E. Jackman and Bryce Lourié are attorneys in the Environmental Group at Los Angeles-based Greenberg Glusker and specialize in advising clients on complex regulatory compliance matters and litigation.

The views and opinions expressed are those of the author and do not imply endorsement by Resource Recycling, Inc. If you have a subject you wish to cover in an op-ed, please send a short proposal to [email protected] for consideration.

This year business news headlines have been dominated by tariffs imposed on imports and their impact on a range of U.S. businesses and consumers. While much is up to debate, one thing is clear: The tariff environment will continue to be fluid in the months ahead, and the scrap metal recycling industry is not immune to its dynamics. Moreover, the industry’s scale and the role it plays in addressing environmental and supply chain challenges are not widely recognized.

The scrap metal industry in the U.S. is enormous, second only to the whole of the Asia-Pacific region in consumption and processing. The American Iron and Steel Institute reports that nearly 70 million tons of domestic steel is recycled annually to make new steel, and according to IBIS World, the U.S. scrap metal recycling industry in 2024 registered total revenue of $43.3 billion, with market size growth at a compound annual growth rate of 4.3% between 2019 and 2024.

Moreover, the western U.S. scrap metal recycling market alone accounts for nearly one-fourth (24.9%) of the national share, and the region is projected to register a CAGR of 5.6% from 2022 to 2032. With a long runway for growth projected, it is critical to understand the potential short- and long-term impacts tariffs will have on the scrap metal industry, especially if you are an operator in this vertical.

How could tariffs on steel and aluminum imports affect those forecasts? Much can be learned from the introduction of tariffs in 2018. Based on previous scenarios, tariffs will likely increase domestic demand for scrap metals as U.S. manufacturers seek local sources to mitigate the added costs of imported primary metals. There are several other factors to consider when looking at the potential impacts tariffs will have on this industry in both the short- and long-term.

Short-Term Benefits for U.S. Scrap Recyclers

Initially, tariffs on metals should help domestic recyclers by increasing demand for U.S. scrap, raising prices and profits. The domestic steel and aluminum industries will likely benefit from reduced competition from imports, which indirectly supports the recycling sector.

In the immediate term, the reintroduction of tariffs is likely to lead to an increase in U.S. steel prices. This is due to the reduced availability of imported steel, prompting domestic mills to raise prices to balance supply and demand.

Over the next three months, the impact on recyclable steel prices will depend on several factors:

• Supply chain adjustments: Domestic steel producers may ramp up production to meet demand and, hence, potentially stabilize prices.
• Market sentiment: If the market anticipates sustained tariffs, prices may continue to rise. Conversely, expectations of tariff removal could lead to price corrections.
• Global trade dynamics: The ebb and flow of responses from the current administration and other countries, such as retaliatory tariffs or trade agreements, will influence U.S. steel and aluminum prices. We are already seeing this as the European Union, China and Canada react to the U.S. administration’s tariff actions.

Long-Term Uncertainty Due to Global Trade Disruptions

The long-term impact of the tariffs will depend on several factors. If U.S. steel and aluminum production remains strong, scrap recyclers could continue to benefit. However, if demand weakens or if global trade disruptions persist, recyclers may face declining exports, increased market volatility and potential price declines.

Other factors include:

• Domestic production capacity: The ability of U.S. steel manufacturers to expand production will be crucial, and the announced tariffs come at a time when industrial production and capacity utilization of these metals have declined to unusually low levels. However, if this capacity is not enough, building new smelters or reopening closed plants is a time-intensive process and could take years.
• Market equilibrium: As domestic production adjusts, the market may reach a new equilibrium, with prices stabilizing based on the new supply and demand dynamics.
• Policy developments: Changes in trade policies, such as the removal or modification of tariffs, will directly affect steel prices.
• Costs and consolidation: In early April, global brokerage firms began to raise their projections for the likelihood the U.S. could enter a recession. If one were to materialize, the impact on the scrap metal industry will largely hinge on the duration. A prolonged downturn could sharply reduce demand, drive up costs and trigger consolidation — potentially favoring larger, well-capitalized scrap metal operators.

Navigating Uncertainty

Simply put: The market prefers stability and certainty. However, there are steps that scrap metal operators can take to approach planning when there is a high level of uncertainty ahead.

1. Don’t panic: Stay prudent and plan to adapt to the circumstances, but don’t overreact. In other words, business owners should take steps grounded in the facts.
2. Experienced leadership: Ensure there is a battle-tested team in place surrounded by trusted advisors. Businesses with strong, experienced leadership are well-equipped to navigate tariffs as well as other challenges and opportunities that will arise in 2025 and beyond.
3. Diversify: In any market, diversification is key, but now even more so. Companies are taking steps to further broaden their customer base and supply chains. This includes strategic acquisitions that provide flexibility, such as securing railroad access to U.S.-based steel mills to mitigate potential export challenges from tariffs. Regardless of market conditions, diversification must remain a priority because with the stroke of a pen, industry dynamics can shift, requiring companies to pivot quickly and implement plan B or C.
4. Enhance inventory management: The introduction of tariffs increases price volatility. The knee-jerk reaction is to stockpile inventory. However, such actions need to be taken with care. Diligent inventory management is key to prevent overexposure and maintain price margins. The more efficient companies are in managing their inventory, the better and less expensive it becomes ­— reducing the need for the use of other tools like hedging.

The tariffs first imposed on aluminum and steel back in 2018 had mixed effects on the U.S. scrap metal recycling industry. While they initially boosted domestic demand and prices for ferrous and non-ferrous scrap, they also disrupted global trade patterns and increased market volatility. We expect similar dynamics will be at play in 2025. In the short term, recyclers will potentially benefit from higher prices, but in the long run, retaliatory tariffs will shift global trade flows and potential oversupply issues could create challenges.

The ultimate impact of the reinstated tariffs will depend on the trajectory of U.S. steel and aluminum production, as well as ongoing trade policies and international market adjustments. To navigate these challenges, business leaders must stay strategic — keeping a level head, diversifying their customer base and supply chain and closely monitoring inventory levels to protect margins. It will not be easy. Companies that maintain optionality and remain flexible will be best positioned to thrive in an ever-evolving global landscape.

Craig Takeshige is a senior vice president and Orange County market leader at Umpqua Bank. He is a commercial banker with 30 years of experience serving the financing needs of the scrap metal industry.

Kevin Foley is a senior vice president and commercial & industrial relationship manager at Umpqua Bank. He is a commercial banker with 15 years of experience and deep expertise in manufacturing, distribution and commodity-based industries.

The views and opinions expressed are those of the author and do not imply endorsement by Resource Recycling, Inc. If you have a subject you wish to cover in an op-ed, please send a short proposal to [email protected] for consideration.