(c) The assessment established pursuant to this section is exempt from the taxes imposed by Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code and shall meet both of the following requirements:

1. (1) The assessment shall be added by a producer to the purchase price of all covered products sold by producers to a California retailer or wholesaler or otherwise sold for use in the state. The assessment shall be clearly visible on invoices or functionally equivalent billing documents as a separate line item and shall be accompanied by a brief description of the assessment or a label approved by the department.
2. (2) Each retailer and wholesaler shall add the assessment to the purchase price of all covered products sold in the state. The assessment shall be clearly visible on invoices or functionally equivalent billing documents as a separate line item and shall be accompanied by a brief description of the assessment or a label approved by the department.

(e)

1. (1) If the amount of the assessment is insufficient to fund the producer responsibility program, the producer responsibility organization shall submit a revision to the producer responsibility plan, pursuant to Section 42968.35, to increase the assessment.
2. (2) If the assessment generates a fund balance at the end of a program year that is greater than one year’s operating costs of the producer responsibility plan, the producer responsibility organization shall submit a revision to the producer responsibility plan, pursuant to Section 42968.35, to decrease the assessment.

(f) The producer responsibility organization shall not expend funds from the assessment for any of the following purposes:

1. (1) Penalties imposed pursuant to this chapter.
2. (2) Costs associated with litigation against the state.
3. (3) Engineered municipal solid waste conversion, as defined in Section 40131.2, the use of cement kilns to burn covered product, or transformation, as defined in Section 40201.