What does a California plastics and packaging law mean for brands?

California Governor Gavin Newsom has approved a new law that he says signals the state’s desire to “go further than any other” in reducing the production of plastic and consumer packaging. unique. Called “the most significant overhaul of California’s plastics and packaging recycling policy in history,” the Plastic Pollution Prevention and Packaging Producer Responsibility Act requires, among other things, that 30% of single-use packaging will be recyclable, reusable or compostable by 2028. , 40% by 2030 and 65% by 2032, and the new law places liability on companies, meaning some brands and retailers are likely to be affected.

Promulgated on June 30, the Plastic Pollution Prevention and Packaging Producer Responsibility Act consists of multiple mandates to reduce the amount of new plastic produced, increase recycling rates in the state of California, and ensure that companies are doing the heavy lifting to make this change. For example, the law requires that in addition to “producers” offering single-use packaging – whether plastic or not – that is fully recyclable or compostable by 2032, plastic producers must reduce the rate of plastic in single-use products (including single-use plastic bags) by 25% by 2032.

(The law defines a “producer” as a “person who manufactures a product that uses covered material and” who owns or is the licensee of the brand or trademark under which the product is used in a commercial enterprise, sold, offered for sale, or distributed within the State”. As such, it applies to in-state and out-of-state entities doing business in California. As for “Covered Materials”, it refers to any “single-use packaging that is regularly recycled, disposed of or discarded after its contents have been used or unpacked, and generally not filled or otherwise reused by the producer.”

The Plastic Pollution Prevention and Packaging Producer Responsibility Act imposes additional burdens on plastic product manufacturing companies, with California law requiring plastic producers to join a producer responsibility organization and collectively contribute 5 billion over the next ten years to fund recycling.

“As with other extended producer responsibility laws,” the Plastic Pollution Prevention and Packaging Producer Responsibility Act “seeks to leverage business relationships to effect change along the supply chain.” ‘supply”, according to Keller and Heckman LLP Jean-Cyril Walker and Alexa Pecht. As such, the law “does not focus on manufacturers of packaging but rather on companies that sell or distribute ‘products’ using such packaging in the state.” In other words, the new law “will primarily affect companies that affix their product name and brand to the covered material, whether or not they actually manufactured the plastic packaging.”

While cosmetics and hair care companies immediately come to mind, Walker and Pecht say they anticipate the effects of the new regulations “will be felt throughout the supply chain, as manufacturers of products and/or brand owners build compliance into purchasing contracts.” In a recent note, lawyers from ArentFox Schiff echoed that sentiment, saying that due to the size and importance of the California market, the new law is expected to “cause national change in the plastics industry as companies are likely to adapt to California standards, whether or not their products are also sold.” elsewhere.” They encourage companies to begin “looking for ways to meet the new law’s reduce and recycle requirements and provide the appropriate products to customers.”

Meanwhile, a separate bill to be voted on in the California Senate Appropriations Committee (potentially as soon as this summer) could hit businesses and retailers, including those in the fashion industry, in ways even more significant. If adopted, AB-2026 – which focuses on plastic packaging recycling – would specifically require “e-commerce” entities that “ship purchased products in or out of state” to reduce plastic packaging units by a certain percentage single-use plastic that they use by January 1, 2030. The bill states that this single-use plastic includes items such as “plastic shipping envelopes, padding and vacuum filling and expanded and extruded polystyrene.

Lawmakers have yet to reveal the percentage cut the law will require companies to make from their 2023 calendar year through early 2030. Although the bill specifies that such a mandate would only apply to companies whose annual gross sales exceed $15. million and more than 100 full-time equivalent employees.

California is not alone in taking a keen interest in the use of plastic and single-use packaging; it is the fourth state to pass such a bill on extended producer responsibility. Beyond that, “there is growing private sector attention, as evidenced recently by the number of shareholder proposals urging companies to step up their efforts to reduce plastic waste,” according to Wilmer Hale Peggy Otum, Shannon Morrissey and Tessa Opalach. “During the 2022 proxy season, more than a dozen plastics-related shareholder proposals appeared on ballots,” typically calling for the company to release reports to “identify how environmental sustainability efforts could be advanced by developing comprehensive sustainable packaging policies and reducing dependence on plastics.

“Two of the proposals were passed and a few others received more than 30% in favor, indicating significant shareholder support for action on plastic waste,” according to Otum, Morrissey and Opalach, who note that the “growing trend of Plastics-related regulation, enforcement and litigation combine to present a host of potential legal and reputational risks to plastic packaging producers and the companies they supply.

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