(a) The department shall approve a PRO that meets the requirements of this chapter and both of the following:

(1) The PRO has a governing board consisting of producers that represent the diversity of covered material placed in the market by those entities. The governing board shall include nonvoting members with representation of material trade associations and companies if those material types are covered by the organization.

(2) The PRO demonstrates that it has adequate financial responsibility and financial controls in place, including fraud prevention measures and an audit schedule, to ensure proper management of funds.

(b) After January 1, 2031, upon the determination of the director that an additional PRO would be beneficial in satisfying the requirements of this chapter, the department may approve additional PROs that meet the requirements of this chapter and that meet all of the following requirements:

(1) The proposed PRO submits to the department, and agrees to cover the department’s costs to review, a petition to establish a new PRO.

(2) The proposed PRO is composed of a sufficient number of producers of a specific covered material or covered material category to jointly comply with the requirements of this chapter.

(3) The proposed PRO for a specific covered material or covered material category agrees to cover the costs of all of the provisions of this chapter applicable to the proposed PRO and its participant producers.

(4) Producers covered by the proposed PRO for the specific covered material or covered material category agree to cover the prorated funding share associated with environmental mitigation funding under Section 42064, as determined by the department, based on the original PRO’s established cost distribution.

(c) In the event that the department determines that a PRO no longer meets the requirements of this chapter, including those set forth in subdivision (a), or fails to implement and administer an approved PRO plan in a manner that effectuates the purposes of this chapter, the department shall revoke its approval of the PRO and, notwithstanding subdivision (b), may approve additional PROs pursuant to subdivision (a).

(Added by Stats. 2022, Ch. 75, Sec. 2. (SB 54) Effective January 1, 2023.)