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July 28, 2023

California Textile Recycling Legislation Delayed to 2024 — And in Need of Improvement

Advisory

Earlier this year, California State Senator Josh Newman (D-Fullerton), with the sponsorship of the California Product Stewardship Council, introduced Senate Bill (SB) 707, the Responsible Textile Recovery Act, which would establish an Extended Producer Responsibility (EPR) program for textiles under the regulatory authority of the California Department of Resources Recycling and Recovery (CalRecycle). The intent of the bill is to enhance recycling and reuse of textiles — a commendable goal given that 85% of textiles end up in landfills and the textile industry is responsible for 5% to 10% of global greenhouse gas emissions — through an EPR funded and implemented by the industry.

In establishing the EPR, the bill would require producers, as defined, to fund, design, and implement the program for collecting, sorting, and recycling textile articles under CalRecycle’s oversight. To that end, program operators — either a single producer or stewardship organization consisting of a group of producers — must submit a complete stewardship plan, including an array of specified data and information, to CalRecycle for review and approval. Program operators must also submit to CalRecycle an annual report. Additionally, SB 707 would require CalRecycle to adopt regulations to govern this program, effective December 1, 2025, at the earliest.

The bill as currently written, however, contains numerous problematic provisions that industry and nonprofits experienced in textile circularity identified. With mounting concerns as the bill progressed, SB 707 was withdrawn from the Assembly Natural Resources Committee, where it was scheduled to be heard. As a result, SB 707 will not progress this year, giving stakeholders more time to work together on crafting a statewide textile recycling program. Meetings are expected this fall and the bill will be eligible to be taken up in 2024. There are several key industry concerns that will have to be addressed in these discussions.

Key Concerns

Important definitions are extremely broad and cover a wide array of textile products. The bill defines “covered product” as any postconsumer apparel or postconsumer textile article that is unwanted by a consumer. The only exceptions are those products covered by the Used Mattress Recovery and Recycling Act and Electronic Waste Recycling Act of 2003. Furthermore, the bill defines textile article as “any item customarily used in households or businesses that are made entirely or primarily from a natural, artificial, or synthetic fiber, yarn, or fabric. For purposes of this chapter, “textile article” includes blankets, curtains and fabric window coverings, knitted and woven accessories, towels, tapestries, bedding, tablecloths, napkins, linens, pillows, and fabric sold by the bolt at retail.” With such a broad definition, other products such as components to motor vehicles and aircraft, filtration media, upholstery and furniture, and architectural fabric could also be covered.

Small businesses in California may be at a disadvantage. The burden of compliance may be placed predominantly on entities located in California — producers, importers, and distributors located in the state. Additionally, there is no de minimis standard included in the bill — which means any producer of any size will be required to comply — and bear the cost of compliance. As a result, any small, family-run store, for example, that buys, sells, or repairs textile products could be treated the same as major national retailers — and required to comply with all of the requirements of this legislation.

Online foreign retailers delivering direct to consumer are not covered. In the case of fabric sold by the bolt, 99% of this material is imported from foreign countries via online retailers that are unlikely to comply. Surviving U.S. manufacturers required to comply may be forced to increase prices — leading more consumers to go to online retailers importing from overseas and likely leading more U.S. companies to exit the market.

No proof of concept. In 2022, the California legislature passed, and the governor signed, SB 1187, which is a fabric recycling pilot project to be located in Los Angeles and Ventura counties. The legislature did not appropriate funding for this project, and as such, it has not yet been carried out. Therefore, there is no proof of concept that the infrastructure exists to carry out an EPR at scale statewide, what will be best practices, or what are problems that need to be resolved.

Liability due to existing state law regarding chemical constituents. In recent years, California has passed numerous laws regulating or banning products from containing certain chemicals. For example, the group of chemicals known as PFAS have been regulated in various consumer products — including textiles. Following the passage of AB 1817 in 2022, state law as currently written would prohibit the manufacture, sale, and distribution of new, not previously used, textiles containing regulated PFAS — including new items that may be made from recycled textile material, even if the new product contains no newly added PFAS. Not only does SB 707 not account for the potential presence of PFAS in textile material to be recycled, but — if state law is unchanged — producers may actually violate AB 1817 in trying to implement these EPR rules.

The regulatory capacity to oversee the program may be limited. Overseeing SB 707 compliance will increase the workload for CalRecycle, which is already in the process of establishing and implementing another new EPR program for plastics packaging required by SB 54, which was passed and signed into law last year. The passage of SB 707 would mean that CalRecycle would need to stand up two new, extensive EPR programs concurrently.

Requirements on producers and program operators are extensive and burdensome. SB 707, like other extended producer responsibility bills that have been considered or passed in California, defines producer to include not just manufacturers, but also licensees, distributors, sellers, importers, and more. Additionally, program operators are defined as producers, or a stewardship organization on behalf of a group of producers, that is responsible for implementing a stewardship program in accordance with the requirements of SB 707.

Under SB 707, producers must:

  • Establish and implement a stewardship program independently, or as part of a group of producers through membership in a stewardship organization
  • Notify all persons through which it is selling, distributing, importing, or offering for sale a covered product in or into the state for sale in or into the state whether it will comply with this chapter individually or through a stewardship organization
  • Provide to the department (CalRecycle) each year a list of covered products that the producer sells, distributes for sale, imports for sale, or offers for sale in or into the state

Similarly, program operators must meet a large list of requirements, including:

  • Establish a method for fully funding the stewardship program in a manner that equitably distributes the stewardship program’s costs among participating producers that reflects production and sales volumes
  • Develop and submit to the department a complete stewardship plan, which itself is required to include an extensive list of data and analysis, within 12 months of the adoption of regulations
  • Draft and submit detailed annual reports

The stewardship plan’s requirements alone are extensive and burdensome — calling for an array of information from financial and product data to education and outreach planning descriptions on how the operator will provide collection containers, support nonprofit entities, fund infrastructure development, and reduce environmental impacts. Much of this required information would be on topics and planning that is outside the operator’s typical area of expertise. Additionally, complying with these requirements may place additional costs on local California businesses — costs that competitors elsewhere, and particularly overseas, may not have to bear.

Next Steps

As a two-year bill, SB 707 can be reconsidered in the 2024 legislative calendar. Over the next few months, we expect Senator Newman and his staff, along with the California Product Stewardship Council as the bill’s sponsor, to conduct robust stakeholder engagement with industry, retailers, nonprofits, and others to revise and amend SB 707 such that it is more fit for its intended purpose — to enhance recycling and reuse of textiles, as specified.

Arnold & Porter’s Sacramento Public Policy team and Consumer Products practice group have been and will continue to be engaged in these discussions. If you have questions or concerns about the development of the textiles recycling program, as contemplated in SB 707, please do not hesitate to contact us.

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.