California’s Gov. Gavin Newsom and his Democratic supermajority in Sacramento have once again chosen high‑profile virtue signaling over practical governance with Senate Bill 54 sweeping packaging “producer responsibility” scheme.
SB 54, formerly known as the Plastic Pollution Prevention and Packaging Producer Responsibility Act, was signed by Newsom in 2022 after several years of negotiations and to head off a more sweeping plastics ballot initiative. It establishes a statewide Extended Producer Responsibility (EPR) program covering “covered material,” defined as single‑use packaging and single‑use plastic food service ware.
The key to this green-grifting monstrosity is the “impact fees.” SB 54 requires producers of single‑use packaging and plastic food service ware to pay fees to a state-designated producer responsibility organization (known as the Circular Action Alliance) based on material type, weight, recyclability, and recycled content, with plastics generally carrying higher rates than non‑plastics.
SB 54 fees are set and collected by Circular Action Alliance, the PRO running the program. Fees are calculated per material type, per unit of weight, and modulated by recyclability and recycled content. The mechanics break down into three layers:Layer 1, Base fee per material type. Each material category (PET, HDPE, PP, mixed plastic, paper, fiber, glass, aluminum, etc.) has a base rate per metric ton. Materials that are harder to recycle in California carry higher base rates because they cost the system more to handle.Layer 2, Eco-modulation. The base fee is adjusted up or down based on design choices. Higher post-consumer recycled (PCR) content reduces the fee. Designs that contaminate recycling streams (PVC labels on PET bottles, dark pigments that defeat optical sorting, mixed-material laminates) increase the fee.Layer 3, Reuse and refill credits. Producers that demonstrate verified reuse, refill, or take-back programs can offset part of their fee. The crediting framework is still maturing, so most producers in 2026 are paying close to base + modulation rather than relying on credits.
So, in other words, these tax dollars are headed to an “Environmental Quality, Protection, and Beautification” organization designated as a 501(c)(3).
Circular Action Alliance (CAA) is a U.S. Producer Responsibility Organization (PRO) dedicated to implementing effective Extended Producer Responsibility (EPR) laws for paper and packaging. As a nonprofit, producer-led organization, CAA is committed to helping producers comply with EPR laws, delivering harmonized best-in-class compliance services and to working with governments, businesses and communities to reduce waste and recycle more. CAA was founded in 2022 and is guided by producers representing the food, beverage, consumer goods, restaurant and retail industries.
The fiscal status of CAA is fascinating. California just legislated a way to send “fees” directly to an “independent organization” that sounds suspiciously like an NGO.
And while the marketing of the “impact fees” may be directed by manufacturers, the reality is that the costs will slam consumers.
California shoppers could soon be paying even more at the checkout line as a sweeping new state recycling measure threatens to send grocery prices soaring, with dairy manufacturers warning some businesses may be forced to shut down or flee the Golden State.Senate Bill 54 is now entering its first phase of implementation, with companies expected to receive their first bills as early as next month, reported SFGATE….It charges companies impact fees on products they sell while also requiring them to phase out packaging that cannot be adequately reused, recycled or composted.The dairy industry says it stands to be among the hardest hit because many of its products rely on packaging that does not currently meet the measure’s requirements.
The potential for impact on interstate commerce is such that 17 state attorneys general are suing over the measure.
A group of 17 states led by Nebraska Attorney General Mike Hilgers and joined by the National Association of Wholesaler-Distributors (NAW) has filed a federal lawsuit challenging California’s Plastic Pollution Prevention and Packaging Producer Responsibility Act, also known as Senate Bill 54. Washington-based NAW says it is joining as the only business plaintiff in the case.Along with Nebraska, the attorneys general of Alabama, Florida, Georgia, Idaho, Indiana, Iowa, Louisiana, Missouri, Montana, North Dakota, Oklahoma, South Carolina, South Dakota, Texas, Utah and West Virginia have joined the lawsuit. They are asking the court to block enforcement of S.B. 54, which establishes a statewide extended producer responsibility (EPR) program for packaging in California, while the case proceeds….The coalition argues California’s law violates four constitutional principles by:
- discriminating against businesses selling into the state in violation of the Commerce Clause;
- imposing content-based restrictions on speech in violation of the First Amendment;
- compelling NAW members to join CAA in violation of the First Amendment; and
- delegating to a private entity government authority to regulate and impose mandatory taxes and fees on businesses selling into California without adequate legislative standards or public oversight to a private organization
“California cannot reach across state lines and force businesses in Nebraska, or any other state, to adopt California’s preferred environmental policies,” Hilgers says. “California does not get to set national policy. Nebraska is leading this coalition because the constitutional problem here belongs to every state.”
SB 54 exemplifies how California’s governance is drifting toward an opaque “Newsom–Nonprofit complex,” where quasi‑public authority and billions in fee revenue are funneled through lightly accountable nonprofit structures, creating significant risks to fiscal discipline and transparency. The result is a policy regime that passes extraordinary costs onto consumers, distorts interstate commerce, and massively expands regulatory power.
Other states should treat California as a cautionary case in 2028, not a model… especially given Newsom’s tendency to expand Nonprofit-Democrat partnerships.
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