California Legislature Proposes Expansive and Unprecedented Regulation of Single-Use Products and Packaging
The California Assembly and Senate recently introduced a pair of identical bills, SB 54 (Senator Ben Allen - D), and AB 1080 (Assembly Member Lorena Gonzalez - D), which would impose the most far-reaching and significant regulation of consumer products and packaging ever in California. The bills, which were most recently amended on May 7, 2019, would require the California Department of Resources Recycling and Recovery (CalRecycle) and the Ocean Protection Council (OPC) to adopt regulations on or before January 1, 2023 to achieve, by 2030, a 75% reduction of the waste generated from single-use packaging and products offered for sale or sold in California through source reduction, recycling, and composting.
The implementing regulations will mandate that:
- single-use products and packaging are source reduced to reusable packaging and products "to the greatest extent feasible,"
- all single-use products and packaging are recyclable or compostable by 2030, and
- manufacturers and retailers of single-use plastic products and packaging reduce waste of those items by 75% by 2030 through combined source reduction and recycling.
To achieve the third requirement, CalRecycle would require manufacturers and retailers to source reduce single-use plastic products and packaging to the "maximum extent feasible" and, as of 2030, would require single-use plastic products and packaging to have a demonstrated recycling rate of at least 75% averaged over three years. Taking a step-wise approach, the bills would require a manufacturer of single-use plastic products and packaging to demonstrate a recycling rate of not less than 20% on and after January 1, 2022, and not less than 40% on and after January 1, 2026, as a condition of sale, and would authorize CalRecycle to impose a higher recycling rate as a condition of sale.
These bills bring into focus the state's far-reaching consumer product recycling goals: former Governor Jerry Brown set a goal of 75% recycling of solid waste by 2020, directing CalRecycle to take a statewide approach to decrease California's reliance on landfills. According to an August 2017 CalRecycle report, total recycling rates in California fell to 44% in 2016, which is the lowest rate since the 75% statewide goal was established in 2011.1 Approximately 35.2 million tons of garbage were dumped into municipal solid waste landfills or exported in 2016, an increase from 29.3 million tons in 2012.2 And, achieving existing recycling goals appears even less attainable, as both China and India have imposed bans on imports of material to be recycled, leaving the U.S. with limited outlets to send recyclable materials.3
Proposed Law Would Target All Single-Use Products and Packaging
One of the most significant aspects of AB 1080 and SB 54 is the expansive, but not yet defined, scope of products and packaging that would fall within the scope of the regulation. As part of its implementing regulations, CalRecycle would determine which products and packaging shall be considered "single-use" and thus subject to the mandates. In doing so, CalRecycle would consider the following subjective criteria:
- "whether the product is routinely disposed of after a single-use,"
- "whether the packaging is routinely disposed of after its contents have been used or unpackaged and is typically not refilled,"and
- "whether the packaging or product is durable, washable, or routinely used for its original purpose multiple times before disposal."
The only products expressly exempt from the scope of the bills are medical devices and products that are required to be sterile, prescription medicine, and the packaging used for such products.
Single-use plastics are a recycling target because many plastic products are not currently recyclable and often end up in the natural environment. The Legislature estimates that only 15% of single-use plastic is recycled in California, and state and local governments, therefore, have increasingly attempted to minimize the presence of plastics in food service and other facilities to reduce this waste stream.
Proposed Law Would Delegate Expansive Authority to CalRecycle
AB 1080 and SB 54 contain few details and require CalRecycle to develop regulations to achieve the specified mandates. Prior to adopting the regulation, however, CalRecycle would adopt a "scoping plan" to evaluate the feasibility of establishing new labeling requirements regarding the recyclability or compostability of single-use products and packaging, minimum postconsumer recycled content requirements for single-use products and packaging, an extended producer responsibility (EPR) program to require manufacturers and retailers to contribute to the costs associated with processing the single-use products and packaging they produce, and other measures.
After the scoping plan is complete, on or before January 1, 2023, CalRecycle would be required to adopt regulations to determine which products or types of packaging are considered "single-use" and thus subject to the regulation. The bills give CalRecycle the authority to develop "any other regulations and policies the department deems necessary." Notably, the bills recognize that it may be difficult to comply with the mandates for all single-use products and packaging, and thus the bills allow CalRecycle to identify products that would "face unique challenges in complying with this chapter," authorizing CalRecycle to require those products to be phased into regulation after 2023.
To determine the amount of source reduction required for each manufacturer and retailer, CalRecycle would also "establish a baseline for each manufacturer and retailer using the last three years of packaging material sold by that manufacturer or retailer" into California. In addition, the bills would require CalRecycle to impose an annual reporting requirement on manufacturers and retailers to provide a plethora of detailed information regarding their single-use products and packaging being sold in California. Finally, the bills contain an alternative compliance mechanism, whereby manufacturers and retailers might be permitted to achieve the requirements of the proposed bills through "flexible mechanisms." However, the proposed bills do not shed further light on such mechanisms, providing CalRecycle perhaps even broader discretion.
Complex Application & Broad-Reaching Impacts
By including all single-use products and packaging, the bills are the most comprehensive and far-reaching legislation to regulate consumer products in California. Further, they delegate unprecedented authority to CalRecycle to regulate single-use products to achieve the source reduction and recyclability mandates in the bills.
The proposed bills would have two main impacts. First, the bills would require a significant, immediate increase in recycling by the state, and the state—along with local municipalities and counties—would need to determine where and how to process the increase in recycled materials. Second, the bills would impact virtually all manufacturers distributing or selling any single-use packaging or product in California, reaching far beyond prior California laws such as the 1991 Rigid Plastic Packaging Container law. The true impact of the bills would be unknown until CalRecycle drafts implementing regulations, but they clearly will impose significant source reduction and recyclability mandates on manufacturers of single-use packaging and products within a short timeframe.
Notably, the bills would require manufacturers to meet extremely high recycling thresholds, but the bills fail to address the infrastructure needed to handle this material domestically. A Department of Finance analysis of SB 1383 (Lara; Chapter 395), which focused solely on organic wastes, indicated the state had to more than double organic waste collection and recycling infrastructure and capacity in less than 10 years to meet the requirements of the bill, costing upward of $20.9 billion. The universe of packaging and products impacted by these bills dwarfs the organics sector, and California has nowhere near the level of infrastructure that is necessary for manufacturers to meet their compliance obligations.
Not only would the proposed bills have wide-ranging impacts, the complexity of the proposed law should be emphasized as well. For example, the impact on manufacturers would translate to a material impact on retailers. Manufacturers work with retail stores on a semi-annual or quarterly basis to determine how their products fit into the stores' shelving planograms. If manufacturers are required to reformulate their packing and design, the repackaging could have a resulting impact on the size and presentation of their products. This, in turn, would impact where the product could be displayed in a retail store, which would need to be implemented in concert with an updated planogram for each store. And because consumer products are shipped and warehoused in cases and pallets, changes in individual unit packaging create a cascade of effects throughout the distribution chain.
Beyond California—Broader Policy Implications
The reach of the proposed bills would not be limited to California because product and packaging manufacturers sending products and packaging into the state—the fifth largest economy in the world—would be subject to the mandates, regardless of where the product or packaging is manufactured. It is therefore likely that products and packaging will be redesigned for the entire US market, if not the global market. California is not alone in the single-use battle, although other states have focused exclusively on single-use plastics rather than single-use products and packaging more generally. At the beginning of April 2019, New York announced that the state legislature approved a ban on single-use plastic bags, effective March 1, 2020, making New York the second state in the country to pass such a ban, after California. And in the European Union, the EU Parliament recently voted to ban single-use plastic products for which alternatives exist on the market by the year 2021.
More to Come in the Single-Use Saga
The California Legislature is poised to push forward these proposed bills, whether in their current or revised form. By May 31, 2019, the Senate and Assembly must pass the bills in their respective houses. The deadline for the bills to pass the second house is September 13, 2019. If passed, the bills would land on the Governor's desk to be signed or vetoed within 30 days, by October 13, 2019. If the bills fail passage this year, because California is in the first of the two-year legislative session, the bills may resume where they left off in the process during the next legislative session.
These proposed consumer products bills are the most far-reaching and significant regulation of consumer products and packaging ever in California. Importantly, there is no identified funding mechanism in the proposed bills, which means the proponents will need to seek a budget request, or (in the more likely scenario) CalRecycle would be given the authority to impose a fee on regulated entities to cover costs.
Arnold & Porter Kaye Scholer LLP 2019 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.
California Department of Resources Recycling and Recovery, State of Disposal and Recycling in California – 2017 Update, Publication # DRRR-2017-01612, at 1 (Aug. 2017)(hereinafter CalRecycle Report). This figure was calculated in relation to waste generation per resident per day and measures all disposal-related activity.
"Local recycling programs rely on foreign countries' willingness to import recyclable materials." Letter from Alameda County to Governor Gavin Newsom RE: Statewide Commission on Recycling Markets (Draft) (Feb. 5, 2019).