Produce packers face narrow exits under California SB 54

California's SB 54 requires producers to cut covered plastic packaging 10% from 2023 levels by January 1, 2027, and fresh produce companies that expect a lawsuit or an exclusion to take them out from under the law should keep preparing to comply. That was the message from speakers at a Nov. 4 webinar hosted by flexible packaging maker Emerald Packaging.

"It's not a difficult law to understand. The rules and regulations are difficult to understand," said Kevin Kelly, CEO of Emerald Packaging. He noted that many companies still ask whether SB 54 applies to them at all, even after key deadlines have passed. The law reaches produce shippers nationwide, not only those based in California.

Kelly was joined by Jeff Bradenburg, president of QFresh Lab, an independent post-harvest physiology, food safety and packaging testing lab. Isa Glassen, sustainable packaging associate at Emerald Packaging, moderated.

Who counts as a producer?

SB 54 and the regulations CalRecycle approved in May define a producer as a brand owner or licensee. The question grows harder with secondary and tertiary packaging. Emerald's own research, verified by outside counsel, found the company qualifies as a producer for the stretch wrap, pallets and corrugated it uses to ship its products.

"The whole producer question seemed open and closed," Kelly said. "But in fact, it's more complex than that."

The law draws a sharp line between two forms of relief:

• Excluded packaging falls outside the law entirely and carries no fees.
• Exempted packaging stays covered. The producer gets relief from compliance deadlines but still pays.

"You're covered by the rates. You're not covered by the dates," Kelly said.

The field pack exclusion covers produce packed where it is harvested, such as a head of lettuce bagged in the field. Kelly said it remains unclear whether the boxes, pallet wrap and pallets traveling with that product are also excluded. Similar questions surround pooled pallets and products routed through distribution centers outside California.

"I don't think there is an answer to it, yet," he said.

The Grower-Shipper Association of Central California has filed a formal application with CalRecycle for a blanket exclusion covering modified atmosphere packaging. Kelly expects a response within about 45 days. The obstacle is the regulatory language: a food safety exclusion requires that packaging be subject to a specific food safety law, regulation or guidance. Bradenburg noted that FDA does not prescribe packaging types; it requires only that the packaging keeps the food safe.

Companies that believe they qualify for an exclusion must still register, report and pay Circular Action Alliance invoices while an application is pending, the speakers said.

Can flexibles meet the statutory targets?

Kelly said the law's targets do not match the state of the industry.

"We're not going to see a 10% reduction in plastic packaging by January 1, 2027," he said.

The law requires producers to cut covered plastic material 10% from 2023 levels by Jan. 1, 2027, rising to 20% by 2030 and 25% by 2032. At least 2% of the 2027 cut must come from shifting to reusable or refillable packaging.

A 30% recycling rate by 2028 is not achievable for flexible packaging or thermoforms, Kelly said, because no system exists yet to recycle them at scale. Film's path to recyclability under the law remains an open question.

Kelly pointed to the US Flexible Film Initiative (USFFI), which is working to prove flexibles can be recycled at scale, and urged produce companies to join. CalRecycle leadership has signaled it wants to see progress, he said.

Compostable packaging offers no relief under SB 54 for now. Switching to compostable plastic earns no source reduction credit, Kelly said. Separately, California's AB 1201 restricts compostability claims, which Kelly said threatens the compostable option in a state he estimated holds 35% of that market. Minnesota's packaging EPR law, by contrast, treats compostables as a compliance pathway.

What do material swaps change for packers?

Bradenburg, who called himself "packaging agnostic," said no single material can replace conventional produce packaging across the industry. Down-gauging, smaller packages, more post-consumer recycled content, fiber and compostables each carry tradeoffs.

Adding PCR changes a film's physical properties, he said, and those changes may surface in the supply chain. Paper often requires changes to filling and sealing equipment. Monomaterial films such as biaxially oriented polyethylene (BOPE) and machine direction oriented polyethylene (MDO-PE) can work, but their barrier properties differ.

"Make sure that you're not trading one set of problems for a different set of problems," Bradenburg said.

Will litigation end the law?

Kelly counted five lawsuits pending against EPR laws in California and Oregon. They include a multistate challenge backed by the National Association of Wholesaler-Distributors and a suit from Oceana, NRDC and Californians Against Waste over the regulations.

The newest, filed Oct. 23 by the California Restaurant Association in Sacramento state court, argues SB 54's producer fees are a tax the state cannot delegate to a private entity.

Kelly said he expects the law to be reopened, not repealed. California agriculture groups have pushed for repeal. "It's not gonna go away," he said. Even if a challenge succeeds, he said, the legislature would likely reenact the fees as a tax.

His advice to producers: register, report and stay at the table. Late registrants should expect noncompliance letters from CAA, and possibly from its Oregon and Colorado programs, because producer data is shared across states.

The near-term milestones that decide what happens next: CalRecycle's response to the modified atmosphere packaging exclusion application, expected within roughly 45 days, and the first statutory source-reduction deadline of Jan. 1, 2027.