‍ Reimbursement Guidance

Local Governments & Recycling Service Providers

Circular Action Alliance (CAA) California is responsible for developing and administering a reimbursement process that determines, verifies and pays for covered costs necessary to meet the requirements of SB 54. The reimbursement process supports system improvements, infrastructure and education and outreach (E&O) activities needed to meet these requirements.

This page supports entities in advance of the application process and provides an overview of eligible covered cost reimbursement.

Materials Covered by SB 54

Circular Action Alliance is the approved producer responsibility organization (PRO) to develop and administer an extended producer responsibility (EPR) program for covered materials under SB 54.  Producers of covered materials pay fees to CAA, which fund the EPR program to meet requirements established in the law.

CalRecycle publishes a Covered Material Category (CMC) List on an annual basis. The list is currently made up of 95 distinct categories of materials, of which 56 meet CalRecycle’s definition of recyclable or compostable. SB 54 requires that jurisdictions and recycling service providers include these CMCs in their collection and recycling programs. While there is already widespread acceptance of these materials in California, CAA will be supporting local jurisdictions and recyclers to ensure full compliance.

CAA is also focused on creating pathways for the other 39 material categories on the CMC list. This requires strategies around source reduction, support for end markets, investments at materials processing facilities and funding collection systems for the broader list of CMCs.

To achieve these objectives, CAA is building material-specific strategies. This strategy relies on collaboration with local jurisdictions, recycling collectors, processors and end markets.

The reimbursement process for these strategies is outlined in this document.

Who Is Eligible for Reimbursement of Covered Costs

Entities eligible to apply for reimbursement include:

• Local jurisdictions and tribes

• Recycling service providers (solid waste enterprises that provide solid waste handling services on behalf of a local jurisdiction)

• Alternative collection systems

• Others that incur SB 54-related eligible covered costs such as school districts and other public educational institutions that operate independently from local jurisdictions

CAA California’s reimbursement process will be implemented in compliance with state and local laws, rules and regulations applicable to solid waste handling and, as SB 54 requires, in a manner that does not violate existing franchise agreements.

What are Eligible Covered Costs?

Covered costs are the same as costs that would ordinarily exist but are greater due to the requirements of SB 54. They are also costs that would not have been reasonably expected to be incurred in the absence of SB 54 or costs approved by the PRO or an independent producer in advance.  . In essence, covered costs refer to new or increased expenses needed to add, expand or change recycling, composting, education and outreach (E&O), or administrative activities to meet SB 54 requirements, above and beyond what was already being done prior to Jan. 1, 2023. Only the incremental portions of those costs qualify as eligible covered costs.

To quality as an eligible covered cost, a project must be consistent with California’s waste hierarchy and support SB 54’s requirement that all covered materials be recyclable or compostable by 2032.

Plastic CMCs must also achieve the following recycling rates per SB 54:

• 30% on and after Jan. 1, 2028

• 40% on and after Jan. 1, 2030

• 65% on and after Jan. 1, 2032

‍To be eligible, covered costs must have been incurred after Jan. 1, 2023.

‍Categories of Reimbursement

‍Eligible covered costs include new and additional costs according to project categories, as described below:

‍Outside of the reimbursement process for eligible covered costs described above, CAA also will fund projects in other areas through additional mechanisms such as direct investments. These areas include:

• ‍End market development

• Reuse and refill

• Waste characterization studies

• Compostable packaging processing

‍What Costs are not eligible for reimbursement? 

Costs that are not eligible covered costs include:

• ‍Costs that would have otherwise happened regardless of SB 54 (e.g., replacement costs)

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

• Costs that are offset by savings or revenue (cost efficiencies)

• 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

• Costs that are unrelated to SB 54‍

• Costs that have been funded through other grants, subsidies, funding, or other incentives provided by other government entities or industry groups.