May 29, 2026
On May 1, 2026, California’s Office of Administrative Law approved the permanent regulations for the state’s packaging EPR law, SB 54, completing a three-year rulemaking process. CalRecycle restarted the rulemaking process following a gubernatorial directive in early 2025 and withdrew a revised set of draft rules in January 2026 before the current regulations were approved. The final rules outline how producers must comply with SB 54, including reducing single-use plastic packaging, improving recyclability and compostability, and funding recycling infrastructure statewide. By 2032, SB 54 aims to reduce covered plastic packaging by 25%, make all covered materials recyclable or compostable, and raise the recycling rate for single-use packaging and food service products to 65%.
With regulations now in effect, producers face a June 1 deadline to register with Circular Action Alliance (CAA) and submit 2023 baseline supply data, register with CalRecycle as an independent reporting entity, or apply for the small producer exemption. CalRecycle estimates the regulations will apply to more than 5,700 producers selling covered materials into California. CAA is expected to submit its California program plan in June 2026. Full program implementation is scheduled to start January 2027.
The approved regulations have not been without controversy. Shortly after the regulations were finalized, NRDC and Californians Against Waste (CAW) announced plans to legally challenge the rules, arguing that the regulations create loopholes that violate the original intent of the law, which they argue included prohibiting “chemical recycling” from counting toward recycling targets. NRDC and CAW contend the final regulations walk back that prohibition by allowing chemical recycling facilities to count as recycling as long as they hold a permit, regardless of environmental impacts. NRDC and CAW also argue the final rules create broad exemptions that shrink the number of covered producers and raise costs for those who remain covered.
The question of how, and whether, to count chemical recycling toward EPR program targets is emerging as one of the most contested questions in packaging EPR rulemaking across the country. The term “chemical recycling” encompasses a wide range of technologies, from conversion processes like pyrolysis and gasification, which break plastics down into hydrocarbon liquids and gases, to depolymerization and purification/dissolution processes that recover monomers or polymers for direct reuse in new plastics — technologies that differ significantly in their outputs, environmental profiles, and implications for a circular economy. PSI’s 2022 discussion paper on chemical recycling provides an overview of the different technologies and offers key considerations for further dialogue.
The way in which recycled content from these processes is tracked adds another layer of complexity: mass balance accounting methods range from more conservative proportional approaches similar to mechanical recycling to more flexible free-allocation models whereby credits from one material can count toward the recycled content of another material, which critics argue can overstate recycled content claims. In Colorado, the Department of Public Health and Environment (CDPHE) disapproved two chain-of-custody methods proposed by CAA – mass balance polymer-only and mass balance free allocation with fuel exclusion – because they determined that these methods could not adequately show that fuel outputs would be excluded from recycled content calculations and may overstate recycled content reported into the program. The American Chemistry Council challenged that interpretation in court in November 2025, arguing it disadvantaged chemical recycling technologies, then voluntarily dropped the lawsuit in February 2026. PSI facilitated the multi-stakeholder Colorado program advisory board through the plan review process, ensuring stakeholders understood the chain of custody methodologies, statutory questions, and program implications so they could formulate recommendations to CDPHE. PSI is well-positioned to play a similar role as discussions unfold in other states implementing EPR laws.