‍ Reimbursement FAQs

A covered cost is a cost that the PRO is obligated to pay for under SB 54. Covered costs are new and additional costs incurred to meet SB 54 requirements, above and beyond what was already being done prior to Jan. 1, 2023.  

To qualify as a covered cost, a project must be consistent with California’s waste hierarchy and do one or both of the following: 

• Support the requirement that all covered materials be recyclable or compostable by 2032 

• Advance plastic recycling targets and applicable milestones, including the following recycling rates for plastic covered material:  

  • 30% on and after Jan. 1, 2028  

  • 40% on and after Jan. 1, 2030 

  • 65% on and after Jan. 1, 2032 

• Costs that would have otherwise been incurred regardless of SB 54 (e.g., replacement costs, cost-of-living increases)  

• Costs that are incurred due to other laws (e.g., SB 1383, AB 341)  

• Costs that are offset (whether wholly or partially) by savings, revenue, or other offsets (e.g., cost efficiencies, tax credits, incentives, other funding sources, etc. )  

• Costs that do not apply to CMCs (e.g., any material that is not single-use packaging or food serviceware, or any material already covered under another California product stewardship or extended producer responsibility program such as California’s bottle deposit program (CRV)) 

• Costs that are unrelated to SB 54  

• Costs that have been funded through other grants, subsidies, customer rates or other incentives provided by another government entities, quasi-government or industry groups. 

CAA expects most reimbursed projects to fall under the following categories: 

• MRF upgrades and expansions  

• Education & outreach 

• Collection (curbside, public space, alternative) 

• Access to recycling and composting services 

• Drop-off sites  

• Transportation (to MRFs, brokers or responsible end markets) 

• Innovations that enhance collection, composting and recycling systems  

CAA will cover costs for new education and outreach activities that support meeting SB 54 objectives and that are in addition to what an entity was doing prior to 2023.  Examples may include: 

• Efforts to increase public participation in recycling and composting 

• Contamination-reduction activities, which may address the proper sorting of both CMCs and non-CMCs (as contaminants)  

• Communicating new additions to acceptable item lists (e.g., film & flexibles, cartons). Updates to existing educational materials to align with statewide messaging or changes to the CMC list 

• Technical assistance to facilitate better access, participation and contamination rates at commercial and/or multi-family properties 

• Direct community engagement at in-person events, meetings or gatherings

All covered administrative costs must be associated with a project with an executed Project Schedule and may include: 

• Completing reimbursement applications for projects, including attending direct meetings with CAA regarding applications 

• Administrative tasks associated with management of projects 

• Fulfilling reporting requirements associated with projects  

• Indirect costs computed under an accepted indirect cost rate / SAM§ 9213.1 methodology 

Except as expressly authorized by CAA, administrative costs are not to exceed 5% of the total contract amount. Applicants are not required to submit documentation to support administrative costs but must maintain records for CAA review upon request. 

Historical Costs (2023-2026) 

Entities may submit a one-time application for reimbursement of historical administrative costs that may include: 

• Providing SB 54-related data and information to CAA and CalRecycle, including completion of surveys 

• Other administrative time and expenses associated with direct implementation of new activities for SB 54 (detailed documentation required) 

CAA will evaluate historical (i.e., 2023-2026) costs for overall reasonableness (both in nature and materiality) to ensure costs remain reasonable and consistent with program requirements.   

The following administrative costs are not covered (whether going or historical): 

• Costs stemming from disputes with CAA, contractors, vendors, consultants or other parties involved in any Project Schedule. 

• Contract negotiations, including negotiations between jurisdictions and recycling service providers 

The foundation of California’s waste and recycling system is the established contracts and franchise agreements between local jurisdictions and service providers.  

SB 54 requires the program plan to describe “…how the plan and the activities undertaken pursuant to the plan will be implemented in compliance with state and local laws, rules, and regulations applicable to solid waste handling and in a manner that does not violate existing franchise agreements” (PRC 42501.1(c)(4)). 

To comply with this requirement, CAA cannot reimburse costs that would result in a violation of a franchise agreement. CAA also must ensure that no duplicate payments are made. To ensure that both of these responsibilities are fulfilled, costs that have already been passed along to ratepayers via existing franchise agreements are not covered costs. 

Supporting and funding reuse and refill systems is a significant part of CAA’s approach to meeting the source reduction goals of SB 54. However, per SB 54, these are not covered costs and therefore will be funded via CAA’s strategic investments, not the reimbursement process. CAA is publicizing reuse and refill funding opportunities, such as RFPs, as they become available. 

Other activities funded through strategic investments may include ‍end market development, waste characterization studies and compostable packaging processing.