(a) As a condition of producer responsibility plan approval, the PRO plan shall comply with the regulations adopted by the department pursuant to Section 42060. The PRO shall submit a plan and budget that includes the provisions necessary for the department to ensure producers covered under the plan comply with this chapter.

(b) The plan shall include all of the following:

(1) Actions and investments that the PRO will implement in order to meet the requirements of this chapter and address the needs and investments identified in the needs assessment.

(2) The source reduction plan required pursuant to Section 42057. For any covered material that is not reasonably anticipated by the PRO to achieve the requirements of this chapter, the PRO shall include in the plan a timeline and actions to discontinue use of the covered material category.

(3) Technologies and means that will be utilized to achieve recycling requirements, including demonstration that the means and technologies meet the conditions specified in subdivision (aa) of Section 42041.

(c) The plan shall include objective and measurable criteria whenever possible, and describe all of the following:

(1) How the PRO will meet the requirements of this chapter, including, but not limited to, how it will, in an economically efficient and practical manner, provide for the necessary infrastructure and viable responsible end markets to ensure the covered material will achieve the requirements of Section 42050 based on the needs assessments.

(2) How the PRO will support and achieve, and how the budget will fund, the collection, processing, recycling, or composting of, and the development of viable responsible end markets for, covered materials to meet the requirements of this chapter. This includes, but is not limited to, actions necessary to sort, segregate, break or flake, and process material to specifications for sale to a responsible end market. For purposes of this paragraph, “specifications” means the third-party purchasing specifications issued by a buyer or buyers of recycled materials for reprocessing into a new product.

(3) (A) How the plan is supplemental to, and not in conflict with, disruptive of, or adversely affecting, the performance of the solid waste network providing services in accordance with local solid waste handling requirements and the intent described in Section 40004, and how the PRO will leverage and utilize existing collection programs and recycling, composting, sorting, and processing infrastructure.

(B) Except as specified in subdivisions (b), (c), (d), and (e) of Section 42060.5, how the plan will be implemented in a manner utilizing solid waste collection programs and solid waste facilities as the designated system for the collection and processing of covered material.

(4) In accordance with Section 40059, 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.

(5) How covered material will be collected, processed, and managed, and recycled, remanufactured, or composted, consistent with the goals, standards, and practices required by this chapter, including ensuring covered material collected for recycling will be transferred to viable responsible end markets for processing into new packaging or products, including, but not limited to, how the plan will enhance or expand viable responsible end markets in California including manufacturing.

(6) Arrangements with processors or recyclers to ensure that covered materials that are not collected through a curbside collection program or other local collection program are collected and recycled at a viable responsible end market, including any investment that will be made to cover the cost of the covered material being processed or recycled by processors or recyclers.

(7) Arrangements to establish and fund reuse or refill infrastructure, fund facility retrofits, or other needed infrastructure to eliminate plastic covered material, shift covered material from plastic to a nonplastic covered material category, or any other actions taken, or that will be taken, to implement the source reduction requirements pursuant to Section 42057.

(8) How postconsumer recycled content will be incorporated into covered material, including the amounts of postconsumer recycled content.

(9) How the plan will be implemented in a manner consistent with the waste hierarchy established in Section 40051.

(d) (1) The plan shall include a fee for participants of the PRO consistent with the provisions of Section 42053, set forth the calculation of the fee, and describe the process through which the PRO will collect the fee from producers that are participants of the PRO’s approved plan.

(2) The plan shall include a description of the fee structure and a schedule of the fees actually charged to producers who are participants of a PRO’s approved plan.

(e) The plan shall include efforts to use education and promotion to encourage proper participation in recycling and composting collection and reuse and refill systems. The PRO shall ensure coordination between these efforts and existing educational and promotional efforts. These may include, but are not limited to, all of the following:

(1) Education and engagement to reduce the rate of inbound contamination or unwanted materials.

(2) Outreach to obtain consistently high levels of public participation in and use of collection services and reuse and refill systems.

(3) Education and engagement with residents on proper recycling, composting, and reuse and refill behaviors.

(4) Support for increased statewide and local outreach needed to achieve the plan’s goals.

(f) The plan shall include a closure or transfer plan to settle the affairs of the PRO that ensures that producers who are participants of the PRO’s approved plan will continue to meet their obligations in the event of dissolution of the organization or revocation of a plan by the department and that describes a process for notifying the department, the advisory board, local jurisdictions, and any contractors of the dissolution. The closure or transfer plan shall provide for sufficient reserve funds in the trust fund or escrow account established pursuant to Section 42056 to allow the PRO to satisfy all obligations in the event of dissolution of the PRO until the participants of the PRO’s approved plan have become a participant of a different PRO’s approved plan.

(g) (1) The plan shall include a process for determining the costs that will be incurred by local jurisdictions, recycling service providers, alternative collection systems, and others under this chapter and shall include a mechanism and schedule for transferring the portion of the fee required by paragraph (7) of subdivision (c) of Section 42053 to local jurisdictions. The PRO shall determine the costs based on information provided by local jurisdictions, recycling service providers, and others under this chapter. Payment of these costs shall be reflected in the budget pursuant to subdivision (j).

(2) The plan shall include a process to resolve disputes for determining and paying the reasonable costs pursuant to paragraph (1) that arise between the PRO and a local jurisdiction or a recycling service provider. This process shall be reviewed by the advisory board to ensure the PRO covers costs related to this chapter and shall become effective upon plan approval by the department.

(h) The plan shall include the source reduction data specified in subdivision (c) of Section 42057.

(i) (1) The plan shall include consideration of the needs assessment and any recommended investments to meet the needs identified in the needs assessments and inform the budget.

(2) The budget shall not propose investing in activities in violation of Section 40004 or an agreement entered into pursuant to Section 40059 and shall include a mechanism to disburse funds for identified activities.

(3) The budget may include, but shall not be limited to, elements that will accomplish all of the following:

(A) Expanding access to or improvement of curbside collection services wherever feasible.

(B) Expanding access to dropoff recycling services or other mechanisms where curbside collection services are not feasible, or as necessary in order to supplement curbside collection services to achieve the requirements of this chapter.

(C) Expanding access to collection services in public spaces.

(D) Providing or facilitating deployment of innovative enhanced collection, composting, and recycling systems and innovative recycling systems within a recycling center or MRF that utilizes advanced technology, such as artificial intelligence and robotics, to improve the identification and sorting of covered materials, where feasible.

(E) Creation of on-premises access to recycling or composting services for multifamily residences.

(F) Funding, providing, or facilitating the efficient transport of materials from remote or rural areas to centralized sorting facilities, brokers, or viable responsible end markets.

(G) Enhancing existing materials recycling or composting infrastructure by developing a quality incentive payment, grants, and other mechanisms sufficient to cover the cost of separating, processing, baling, recycling, composting, remanufacturing, and transporting desired materials that meet viable responsible end market quality specifications, or for reducing the rate of inbound contamination to composting facilities.

(H) Infrastructure or other mechanisms needed to implement a source reduction plan, including, but not limited to, investments in reuse, refill, and composting infrastructure.

(I) Infrastructure or other activities needed to achieve recycling rates for all covered material under the plan and ensure covered material is recyclable or compostable.

(4) In developing the budget, the PRO may delineate investments the PRO will make based on covered material categories.

(j) (1) The plan shall include a budget designed to fully fund the costs necessary to implement this chapter. The budget shall include, but not be limited to, fully funding the plan and all other costs associated with implementing the plan, including, but not limited to, all of the following:

(A) Actions and investments identified in the plan to fund the budget and needs and investments identified in the needs assessments.

(B) Costs associated with this chapter incurred by local jurisdictions, recycling service providers, and other collection programs, and costs related to consumer outreach and education; the transportation of covered materials to a materials recovery facility, broker, or viable responsible end market; cleaning, sorting, aggregating, and baling covered materials as necessary to bring those materials to a viable responsible end market; waste stream sampling and reporting required by this chapter for local governments; costs incurred to educate ratepayers to improve the preparation and sorting of covered material; and improvements to collection, sorting, decontamination, remanufacturing, and other infrastructure necessary to achieve recycling rates. These costs include costs related to both curbside and noncurbside collection programs and may be varied based on population density, distance to a viable responsible end market, and other relevant factors.

(C) Reimbursing costs incurred by the department and the California Department of Tax and Fee Administration.

(D) Administering the PRO.

(E) Environmental mitigation activities associated with Section 42064.

(F) Investments to develop and sustain viable responsible end markets for each covered material category.

(G) Other investments necessary to implement the plan and achieve the source reduction, recyclability and compostability, recycling rate, and other requirements of this chapter, including, but not limited to, ensuring that plan implementation avoids and minimizes negative environmental or public health impacts on disadvantaged or low-income communities or rural areas.

(H) If reasonable and able to be discretely directed, funding derived from a material type may be spent on investments needed for that specific material type.

(2) A producer or PRO shall not expend revenue collected for implementation of the plan for any of the following purposes:

(A) To pay an administrative civil penalty pursuant to Section 42081.

(B) To pay costs associated with litigation between the producer or organization and the state.

(C) To compensate a person whose position is primarily representing the PRO relative to the passage, defeat, approval, or modification of legislation that is being considered by a local, state, or federal government body, nor shall the PRO use or permit the use of these funds for paid advertisement 30 calendar days prior to or during a legislative session for the purposes of encouraging the passage, defeat, approval, or modification of legislation that is being considered, or was considered during the previous legislative session.

(D) To subsidize, incentivize, or otherwise support incineration, engineered municipal solid waste conversion, the production of energy or fuels, except for fuels produced using anaerobic digestion of source separated organic materials, or other disposal activities.

(3) (A) A PRO shall not maintain total program reserves exceeding 60 percent of its annual operating expenses, consistent with the requirements of the Financial Accounting Standards Board’s Accounting Standards Update 2016-14, Not-for-Profit Entities (Topic 958), and any future updates to that standard.

(B) The department, in approving the annual PRO budget, may authorize the total reserves to be increased to up to 75 percent of the PRO’s annual operating expenses if the department determines the increase is necessary to implement the requirements of this chapter.

(C) If a PRO’s reserves exceed the amount specified in subparagraph (A) or (B), the department may require the PRO or a participant producer to increase spending on implementing the requirements of this chapter.

(k) Consistent with subdivision (l), as part of the plan, the PRO or a participant producer may rely on a range of means to collect and recycle or compost various categories of covered materials that are not collected and recycled or composted through a curbside collection program or other local collection program, including, but not limited to, dropoff recycling services and retailer take-back.

(l) (1) A plan shall include curbside recycling and composting collection for covered materials under any of the following circumstances:

(A) The category of covered materials can be made suitable for curbside collection and can be effectively sorted by the facilities receiving the curbside collected material for recycling or composting.

(B) The recycling facility providing processing and sorting service, in consultation with the local jurisdiction, agrees to include the category of covered materials as an accepted material for recycling or composting and agrees to collect and sort the material in a manner that achieves the quality necessary for recycling and remanufacturing or composting.

(C) The provider of the curbside collection and recycling or composting service agrees to the costs arrangement.

(2) If a MRF chooses to send material to another sorting facility for additional sorting and recycling of covered materials, the PRO shall provide the initial MRF a rebate based on criteria the PRO shall develop to cover transportation costs of the covered materials provided the covered material is free of toxic or hazardous materials.

(m) The plan shall include specific measures to ensure that producers participating in the plan comply with the requirements of the plan and this chapter. Those measures shall include, at a minimum, all of the following elements:

(1) Adequate incentives for compliance, including, but not limited to, fees for failing to provide accurate and timely information required to be provided to the PRO or otherwise materially violating requirements of the plan or this chapter. Notwithstanding the PRO’s assessment of a fee, the department may take enforcement action pursuant to Article 5 (commencing with Section 42080) against individual producers or the PRO in violation of this chapter.

(2) Protocols to ensure that the PRO becomes aware, within a reasonable time, of producers’ violations of the requirements of the plan or this chapter.

(3) Criteria for determining when a producer’s performance merits terminating the producer’s participation in the PRO’s plan, and a process for making that determination.

(4) Record maintenance protocols requiring the PRO to maintain records sufficient to demonstrate whether each producer participating in the plan has complied with the requirements of the plan and this chapter for at least the previous three years. Those protocols shall ensure that all records remain reasonably accessible by the department upon request.

(5) The plan shall include the specific data information required under subdivision (c) of Section 42057.

(n) The PRO shall ensure that the plan implementation avoids or minimizes negative environmental or public health impacts on disadvantaged or low-income communities or rural areas and vulnerable communities outside the state.

(Amended by Stats. 2023, Ch. 848, Sec. 6. (AB 1526) Effective January 1, 2024.)