A workable compromise on a circular economy policy for California was reached in the final days before the Legislature left for summer recess and resulted in the billion-dollar plastics tax ballot initiative being pulled by proponents.

After years of negotiation, the compromise bill, SB 54 (Allen; D-Santa Monica), passed the Assembly (June 29) and Senate (June 30) with bipartisan support.

The bill was supported by a wide mix of stakeholders, including environmental groups, industry advocates, local governments and agriculture.

After the legislation passed, the pending plastics initiative — the California Plastic Waste Reduction Regulations Initiative — which was slated to appear on the November ballot, was pulled from the ballot by the three ballot proponents.

The initiative, which was opposed by the California Chamber of Commerce, had proposed a new tax of up to $0.01 on every piece of single-use plastic packaging and foodware sold in California.

The CalChamber has taken no position on SB 54, but the current legislative approach offers far more long-term policy certainty than was proposed in the ballot measure.

“While California businesses, both large and small, will face a maze of environmental regulations as a result of SB 54, we believe that this proposal ensures long-term policy certainty around recycling and packaging to help create a circular economy and avoids a costly and disruptive ballot initiative that would substantially raise taxes on all Californians and leave California’s businesses susceptible to future attempts at expanded regulations,” said CalChamber President and CEO Jennifer Barrera. “Notably, the legislative compromise on this issue allows the Legislature to make changes to the proposal in the future, if necessary, rather than having to go back to the ballot.

SB 54 Stakeholder Discussions

The CalChamber was among the involved stakeholders working to reach agreement on a legislative proposal that would result in proponents pulling the plastics initiative from the ballot.

SB 54, as revised on June 29, represents the culmination of hundreds of hours of meticulous discussions with all stakeholders, from local governments and waste haulers to nongovernmental organizations and businesses. Initial negotiations between environmental and business advocates on circular economy legislation began in 2018 and have continued every year since.

Unlike prior versions of SB 54, the 2022 version of the bill provides certainty, funding for recycling infrastructure, and places limits on agency rulemaking. In addition, SB 54 now provides protections for small businesses, agriculture and ratepayers.

Ballot Initiative

The initiative proposal, which now will be removed from the ballot, called for enacting a new tax of up to $9 billion annually on businesses selling in or into California. If enacted, the tax would have been the second largest tax increase in California history.

In addition, the ballot measure would have resulted in the arbitrary selection of winners and losers in the marketplace and would have granted almost unlimited regulatory authority to the state agency responsible for managing recycling in California. Also, the initiative provided no protections for small business or agriculture.

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