Extended Producer Responsibility: Chile and California going in the same direction to prevent plastic pollution
Felipe Massardo Rojas
On June 30, 2022, California enacted Senate Bill No. 54, the Plastic Pollution Prevention and Packaging Producer Responsibility Act (‘SB 54’). This law is one of the most ambitious in the United States, heavily restricting the use and distribution of plastics and single-use packaging. The initiative is the most recent advance in the field of plastic pollution prevention and recycling in California, but it is only a continuation of a long-standing strategy that the State has undertaken in this area (in fact, California already has a goal that no less than 75% of the solid waste generated each year should be reduced, recycled, or composted).
SB 54 enshrines the concept of ‘extended producer responsibility’, transferring the costs and burdens associated with plastic pollution to producers. The law regulates single-use packaging and single-use plastic (including plastic-coated) food service ware—collectively referred to by the law as ‘covered materials.’
A similar phenomenon is observed on the other side of the continent. Indeed, in 2016, one of the most significant regulations on recycling was approved in Chile: Law No. 20,920, which established the framework for waste management, extended producer responsibility and the promotion of recycling (better known as the ‘REP Law’). This regulation created, among other environmental management instruments, extended producer responsibility for certain products considered a priority due to their characteristics and polluting potential. The purpose of the law was to make the producers of priority products (including importers of goods manufactured abroad) responsible for the organization and financing of the management of waste generated by such products at the end of their useful life. This regulation was later complemented with the enactment of Law No. 21,368, which regulated the delivery of single-use plastics and plastic bottles.
It can be said that the Chilean and the Californian laws share the same principles and have important substantive similarities, such as obligations of producers, quantification of waste reduction objectives, products regulated by law, or systems for the implementation of the objectives of the respective regulation. However, SB 54 and the Chilean laws do not treat the same way those issues.
Firstly, SB 54 focuses on single-use packaging and plastic food service ware, excluding other categories such as medical device containers and beverage containers. In Chile, the REP Law broadly covers ‘containers and packaging’ made of any material (which has generated many doubts when interpreting the meaning and scope of the regulation), while Law No. 21,368 introduced specific rules for single-use plastic utensils and plastic bottles.
Regarding producers’ obligations, SB 54 requires producers of covered materials that are sold, offered for sale, imported, or distributed in the State of California to ensure (i) that the amount of plastic covered material in the State is reduced at least by 10% by 2027, 20% by 2030, and 25% by 2032 (in accordance with the standards of the law and the instructions issued by the California Department of Resources Recycling and Recovery (known as ‘CalRecycle’)); (ii) all covered material is recyclable or compostable by 2032; and (iii) plastic covered material is recycled in California at a rate of at least 30% by 2028, 40% by 2030 and 65% by 2032.
The REP Law, meanwhile, also established a legal framework based on a system of collection and recovery targets for waste from priority products (including packaging). However, this law did not set the targets, but entrusted the competent authority (the Ministry of the Environment) with the issuance of differentiated target decrees for each of the priority products. Furthermore—in accordance with the principle of gradualism enshrined in the REP Law—the obligations to prevent the generation of waste and promote its reuse, recycling or other types of recovery are to be established and enforced progressively. This is done by considering factors such as the quantity and hazardousness of the waste, the available technologies, and social and economic impacts. To date, the goals set by the authority have been quite ambitious, at levels like those set by the California law, although only limited to containers and packaging, and tires.
As for Law No. 21,368, it prohibits the delivery of single-use (i.e., non-reusable) products in restaurants and food outlets, when food is to be consumed in the same premises. If such food is sold to take away, the delivery of disposable products made of recoverable materials other than plastic or made of certified plastic (that is, plastic composed totally or partially of materials produced from renewable resources, designed to be composted, complying with the requirements established in the regulation of this law – not yet issued) is allowed.
SB 54 also prohibits the sale, offering for sale, distribution or import of products made of expanded polystyrene used in the dispensing of food, unless it is demonstrated that all expanded polystyrene in California will be recycled by at least 25% by 2025, 30% by 2028, 50% by 2030, and 65% by 2032. Conversely, Chile’s Law No. 21,368 outright prohibits the delivery of all types of single-use products made of expanded polystyrene, both for consumption inside and outside of restaurants and food outlets, with no exceptions allowed.
Another innovation of SB 54 is the creation of Producer Responsibility Organizations (‘PROs’), non-profit entities in charge of ensuring compliance with the law. The PRO will be in charge of, among other things, creating a covered materials reduction plan, and identifying technologies and mechanisms to comply with the requirements of the law. Each PRO’s plan and the budget for its implementation must be approved by CalRecycle.
SB 54 provides that, as a general rule, all producers of covered materials must join a PRO by 2024. No producer may sell, offer for sale, import, or distribute covered materials in California unless such producer is authorized to participate in a PRO’s plan (for the reduction, collection, treatment, and recycling of covered materials). In a narrow exception, producers that meet certain specific recycling requirements may comply with the regulations of the law on an individual basis (i.e., without participating in a PRO), assuming the same responsibilities as a PRO.
In turn, and similar to the new California law, the REP Law integrated the associative or collective component in two ways. First, the REP Law created waste managers—duly authorized natural or legal persons, public or private, in charge of carrying out waste management operations. Second, the REP Law created collective management systems—non-profit entities responsible before the Ministry of the Environment, whose exclusive purpose is the management of waste from priority products. Like the PROs under SB 54, management systems must be authorized by the competent agency and must submit a management plan containing certain minimum elements. However, the REP Law is considerably more flexible than SB 54, in that it expressly allows producers to comply with the regulations through individual or collective management systems.
An important difference between SB 54 and the REP Law is related to the costs associated with compliance. SB 54 not only passes on the costs associated with plastic pollution to its producers, but also creates new financial obligations both for producers of covered materials (who must pay a fee to the respective PRO) and for each PRO (which must pay an ‘administrative fee for the circular economy’ to CalRecycle). Additionally, beginning in 2027, the State tax authority will impose an additional fee of U$500 million on each PRO, to be deposited into the Plastic Pollution Mitigation Fund. Each PRO may, in turn, surcharge up to U$150 million to producers of covered materials in order to comply with this obligation.
The REP Law, on the other hand, is limited to establishing the responsibility of producers for the costs associated with the management of waste produced by their priority products, as well as costs derived from other actions to ensure compliance with targets (for example, labeling standards, eco-design requirements, or changes in the composition of their products). As for collective management systems, the REP Law only requires them to maintain a bond or insurance to guarantee compliance with their obligations, and to pay the corresponding fees if they obtain a permit for the use of national public property, to be used to carry out their waste management activities. Although the REP Law considers the creation of a Recycling Fund, it will be composed primarily of public resources and voluntary contributions, but not of fees to be paid by producers.
Regarding the obligations of the competent authorities, SB 54 and the REP Law are quite similar. CalRecycle has several obligations under SB 54, including the issuance of regulations on the financing of the law’s objectives; the determination of the information to be reported by producers and PROs; the publication of a catalogue of covered materials, including those considered recyclable and/or compostable; the definition and publication of new recycling goals; and the creation of an advisory board to identify problems in the application of the law and propose measures and solutions. The Chilean Ministry of the Environment, in turn, must issue decrees on collection and recovery goals for priority products; authorize management systems; administer the registry to which waste producers and managers must report their data; and design and implement education programs on environmental protection and the promotion of recycling, among others.
Finally, the entity in charge of overseeing compliance with SB 54 is mainly CalRecycle, and failure to comply with such law by producers of covered materials or by a PRO may result in the revocation of already approved reduction plans, the obligation to adopt corrective measures, and the imposition of penalties of up to U$50,000 per day payable to the Circular Economy Penalty Account to be created by the law.
On the other hand, the supervision of the obligations under the REP Law is entrusted to the Superintendency of the Environment, a sanctioning entity under the Ministry of the Environment, while the supervision of compliance with Law No. 21,368 is entrusted to the Municipalities, which may act ex officio or upon a complaint from any person, filing a case before the relevant local courts. The penalties for non-compliance with the REP Law range from a written warning to fines of up to 10,000 Annual Tax Units (‘UTA’) (U$ 5,900,000 approx.), while the fines that can be imposed for violations of Law No. 21,368 range from 1 to 5 Monthly Tax Units (‘UTM’) (U$ 60 to U$ 300 approx.) for each single-use product delivered in violation of the provisions referred to above.
Thus, there is no doubt that the Chilean and Californian legislation on extended producer responsibility and limits to plastic pollution have many elements in common and point in the same direction. In comparative terms, both legislations represent ambitious efforts to reduce plastic waste pollution, aware of the great contribution of these pollutants in the context of the current climate crisis.
It remains to be seen how these regulations will be applied on both sides of the continent, considering that many of the obligations they impose contain provisions for deferred application. Moreover, it is clear that some of these obligations represent a leap forward for many producers, and the repercussions that these legislations may cause (in terms of economic, social, and political impacts) are not yet fully known.