SB 54: How CAA's October program plan compares to the June draft

MARKET UPDATES

October 21, 2026

Grace Lam

Co-Founder

On October 13, 2026, Circular Action Alliance (CAA) submitted its revised program plan for California's Plastic Pollution Prevention and Packaging Producer Responsibility Act (SB 54) to the California Department of Resources Recycling and Recovery (CalRecycle). Compared with the June 18 draft posted for public comment, the October plan is cheaper, softer on penalties, and finally gives producers real numbers to work with. At Neta AI, we compared the two versions section by section, and many of the changes below are not listed in CAA's own summary of revisions (Appendix D).

Key Takeaways

The five-year budget dropped by $1.5 billion to $4.2 billion, driven mostly by a cut to material-specific investments, while administrative costs roughly doubled.
2027 fees are now single rates instead of ranges, and 45 of 95 covered material categories came in below June's low end, though the plastic pollution fee rose.
Both the 2027 bonus and the 2027 malus are set at 5%, and June's steepest design-feature penalty was dropped.
Source reduction incentives have dollar values for the first time, including a virgin plastic malus that rises from $100 to $200 per ton by 2029.
The status of many hard-to-recycle formats remains unsettled, with exemption applications for 56 categories pushed to 2027.

Key Takeaways

The five-year budget dropped by $1.5 billion to $4.2 billion, driven mostly by a cut to material-specific investments, while administrative costs roughly doubled.
2027 fees are now single rates instead of ranges, and 45 of 95 covered material categories came in below June's low end, though the plastic pollution fee rose.
Both the 2027 bonus and the 2027 malus are set at 5%, and June's steepest design-feature penalty was dropped.
Source reduction incentives have dollar values for the first time, including a virgin plastic malus that rises from $100 to $200 per ton by 2029.
The status of many hard-to-recycle formats remains unsettled, with exemption applications for 56 categories pushed to 2027.

A smaller budget, with more going to overhead

The October plan sets the five-year fee budget at $7.81 billion to $13.05 billion, down from $9.35 billion to $17.24 billion in June. Most of the reduction comes from material-specific investments, which fell from $1.9 billion–$3.5 billion to $65 million in pilots. A new end market incentives line of $269 million to $1.41 billion partly replaces it. The closure and transfer fund was roughly halved to $251 million to $529 million, while administrative costs roughly doubled to $528 million to $715 million.

Five-year fee budget fell from $9.35 billion to $17.24 billion in June to $7.81 billion to $13.05 billion in October

What this means for producers: Lower system spending flows through to lower fees, but CAA now describes the budget as planning estimates rather than commitments. It will be updated annually, with no cap on increases.

2027 fees are now single rates

June's draft gave a low-high range for each covered material category (CMC). The October plan sets a single 2027 rate, and 45 of 95 categories landed below the low end of June's range. Flexible film saw the largest drops: polystyrene film fell from 70–179 cents per pound to 30 cents.

The Plastic Pollution Mitigation Fund (PPMF) fee moved the other way. At $0.26 per pound, it sits above June's 17–25 cent range. The reuse investment fee fell to $0.03 per pound, below June's 4–10 cents.

45 of 95 categories came in below June's low end. Polystyrene film fell to 30 cents per pound; the PPMF fee rose to 26 cents per pound

What this means for producers: Flexible packaging got much cheaper than June's ranges suggested, while plastic-heavy portfolios will pay more PPMF than June's top end.

Eco-modulation starts small

In the October plan, the 2027 bonus for high recycling rates and the malus for non-recyclability are both set at 5% of the base fee. June's draft included a malus on problem design features that would have started at 10% of the base fee in 2028 and climbed to 100%. That schedule is gone, and the design malus now begins in 2029 with no value set. The toxics malus also remains deferred to 2029. Under a new rolling timeline, producers learn of any new bonus or malus about two years before it appears on invoices.

June's 10% to 100% design malus was dropped; the 2027 bonus and malus are both 5%

What to watch: Design, labeling and toxics factors arrive in the 2029 program year, and their values have not been published.

Source reduction now has prices

None of the source reduction incentive values appeared in June's draft. The October plan sets a malus on all virgin plastic of $100, $150 and $200 per ton for 2027, 2028 and 2029, designed to be revenue neutral by funding the bonuses. The recycled content bonus varies sharply by resin: $500 per ton for PET and PP, $400 for colored HDPE, $100 for other resins, and $20 for natural HDPE and LDPE. Only PCR certified by the Association of Plastic Recyclers (APR) qualifies.

CAA also acknowledges it is all but certain to miss the 2027 source reduction targets and is applying for a program-wide exemption. Producers' individual source reduction plans will not be enforced.

Virgin plastic malus of $100, $150 and $200 per ton for 2027 to 2029; recycled content bonus from $500 per ton for PET and PP to $20 per ton for natural HDPE and LDPE

What this means for producers: Source reduction is measured by absolute weight against a 2023 baseline, so growing brands get no per-unit credit.

Material status is still open

Rigid polystyrene moved from phase-out to phase-in, citing a June 2026 industry study. Recycling-rate exemption applications for 56 material categories were pushed to 2027 rather than filed with the October plan. As a result, plan approval will not settle where most hard-to-recycle formats stand.

What to watch: The 2027 exemption filings will determine the status of many hard-to-recycle formats.

What producers should do now

Rerun 2027 fee models using October's single rates rather than June's ranges.
Check plastic-heavy SKUs against the $0.26 per pound PPMF fee.
Build the virgin plastic malus into 2027 to 2029 budgets.
Track PCR sourcing against APR certification, the only standard that qualifies for the bonus.
Hold off on treating any format's status as final until exemption decisions are made.

What's next?

CalRecycle has 75 days from the October 13 submission to respond, putting a decision around late December 2026. Until then, the October numbers are the best basis for 2027 planning.

At Neta AI, we model EPR fee exposure at the SKU level, so teams can see how changes like these flow through their packaging footprint and SKU portfolio. If you want to see what the October numbers mean for your portfolio, reach out. We'd love to walk you through it.

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