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AB-2784 Solid waste: thermoform plastic containers: postconsumer thermoform recycled plastic.(2021-2022)

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Date Published: 09/01/2022 09:00 PM
AB2784:v95#DOCUMENT

Enrolled  September 01, 2022
Passed  IN  Senate  August 29, 2022
Passed  IN  Assembly  August 30, 2022
Amended  IN  Senate  August 25, 2022
Amended  IN  Senate  August 01, 2022
Amended  IN  Assembly  May 19, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 2784

Introduced by Assembly Members Ting and Irwin
(Principal coauthor: Senator Skinner)
(Coauthor: Assembly Member Calderon)

February 18, 2022

An act to add Chapter 6.2 (commencing with Section 42375) to Part 3 of Division 30 of the Public Resources Code, relating to solid waste.


LEGISLATIVE COUNSEL'S DIGEST


AB 2784, Ting. Solid waste: thermoform plastic containers: postconsumer thermoform recycled plastic.
(1) The California Integrated Waste Management Act of 1989, administered by the Department of Resources Recycling and Recovery, requires a rigid plastic packaging container, as defined, sold or offered for sale in this state, to meet, on average, at least one of 5 specified criteria, including that the container be made from 25% postconsumer material.
This bill, commencing January 1, 2025, would require the total thermoform plastic containers sold or imported by a producer, as defined, to contain, on average, specified amounts of postconsumer thermoform recycled plastic, as defined, per year pursuant to a tiered plan that would require the total thermoform plastic containers to contain, on average, and depending on the recycling rate, no less than 20% or 30% postconsumer recycled plastic per year on and after July 1, 2030. The bill would exempt from these requirements, as specified, thermoform plastic containers used to package dairy products if the department determines pursuant to an application submitted by one or more dairy products manufacturers that certain conditions exist. The bill would require, on or before March 1 of each year, a producer to report to the department, under penalty of perjury, the amount in pounds of all thermoform plastic containers sold in or imported into the state for the preceding calendar year, the number of containers returned and refilled, and the amount in pounds of each type of postconsumer resin used in those containers. By expanding the crime of perjury, the bill would impose a state-mandated local program. The bill would require certain importers and manufacturers of thermoform plastic containers to register and pay a fee to the department and would require those entities and certain purchasers and exporters to report to the department specified sales and other information. The bill would require the department to post the reported information on its internet website. The bill would require certain entities to maintain specified records and documentation.
This bill would authorize the department to conduct audits and investigations and take enforcement action against a producer to ensure compliance. The bill would exempt from the California Public Records Act trade secrets and proprietary information obtained from those audits and investigations. The bill would impose annual administrative penalties in a specified amount, calculated and authorized to be adjusted by the department, for violating these requirements. The bill would require collected administrative penalties to be deposited into the Thermoform Recycling Enhancement Penalty Account, which the bill would create. The bill would make funds in the penalty account available only upon appropriation by the Legislature.
(2) Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 (a) The Legislature finds and declares all of the following:
(1) For the past two decades, polyethylene terephthalate (PET) thermoform clamshell packaging has contained the most California-recycled content of any food packaging in the United States.
(2) In another step to further reduce the produce industry’s environmental impact, major fresh produce growers announced their commitment to using sustainable packaging.
(3) This commitment to recyclable packaging complements existing actions that use recycled content to make thermoform food packaging.
(4) Clamshell packaging revolutionized the ability of farmers to transport their fresh produce to consumers nationwide. The industry is working together on the next phase of that revolution, one that preserves the ability to safely transport fresh produce to market while minimizing product damage, reducing food waste, and demonstrating ongoing environmental stewardship.
(5) Since the 1990s, many farmers have shifted to the use of clear plastic packaging shaped as a vented box with a hinged lid, also known as a clamshell. This type of packaging created a market to convert recycled plastic water bottles into clear, lightweight containers that protect the fruit from damage and contamination, thus reducing food waste.
(6) Further, this type of packaging decreases greenhouse gas emissions by reducing the amount of raw resources needed to make the packaging and reducing fuel use as lighter packaging makes lighter shipments.
(7) Beyond the climate-friendly reduction in resource use and greenhouse gas emissions, enhanced plastic recycling generates jobs and economic benefits for local communities, creating a circular economy to produce, collect, recycle, and reprocess plastic clamshells.
(b) It is the intent of the Legislature in enacting this act to close the loop on thermoform plastic containers used in food and beverage applications in California, ultimately achieving a 75-percent recycling rate for thermoform plastic containers.
(c) It is further the intent of the Legislature that PET thermoform containers that are subject to this act be recycled and therefore should be encouraged to be collected in recycling systems.

SEC. 2.

 Chapter 6.2 (commencing with Section 42375) is added to Part 3 of Division 30 of the Public Resources Code, to read:
CHAPTER  6.2. Thermoform Plastic Containers

42375.
 For purposes of this chapter, the following definitions apply:
(a) “Postconsumer thermoform recycled plastic” means plastic produced from the recovery, separation, collection, and reprocessing of a thermoform container that would otherwise be disposed of or processed as waste after consumer use.
(b) (1) “Producer” means an entity that manufactures a product that is packaged in thermoform plastic containers and that owns or is the licensee of the brand or trademark under which the product is used in a commercial enterprise, or is sold, offered for sale, or distributed in the state.
(2) If there is no person in the state who is the producer for purposes of paragraph (1), the producer of the thermoform plastic container is the owner or, if the owner is not in the state, the exclusive licensee of a brand or trademark under which the product that is packaged in a thermoform plastic container is used in a commercial enterprise, or is sold, offered for sale, or distributed in the state. For purposes of this subdivision, an “exclusive licensee” is a person holding the exclusive right to use a trademark or brand in the state in connection with the manufacture, sale, or distribution of the product packaged in a thermoform plastic container.
(3) If there is no person in the state who is the producer for purposes of paragraph (1) or (2), the producer of the thermoform plastic container is the person who sells, offers for sale, or distributes the thermoform plastic container in or into the state.
(4) “Producer” does not include a person who produces, harvests, and packages an agricultural commodity on the site where the agricultural commodity was grown or raised and purchases less than 100,000 pounds of thermoform plastic containers annually.
(5) For purposes of this chapter, the sale of thermoform plastic containers shall be deemed to occur in the state if the thermoform plastic containers are delivered to the purchaser in the state.
(c) (1) “Thermoform plastic container” means a food or beverage plastic container, such as a clamshell, cup, drinking cup, pod, tub, lid, box, tray, egg carton, or similar rigid, nonbottle packaging, formed from sheets of extruded resin and used to package items such as fresh produce, baked goods, nuts, deli items, and nonbottle beverages.
(2) “Thermoform plastic container” does not include any of the following:
(A) A lid or seal that does not contain plastic.
(B) Packaging used for any of the following products:
(i) Medical products and products defined as devices or prescription drugs, as specified in the Federal Food, Drug, and Cosmetic Act (21 U.S.C. Secs. 321(g), 321(h), and 353(b)(1)).
(ii) Drugs that are used for animal medicines, including, but not limited to, parasiticide products for animals.
(iii) Products intended for animals that are regulated as animal drugs, biologics, parasiticides, medical devices, or diagnostics used to treat, or administered to, animals under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 301 et seq.), the federal Virus-Serum-Toxin Act (21 U.S.C. Sec. 151 et seq.), or the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sec. 136 et seq.).
(iv) Infant formula, as defined in Section 321(z) of Title 21 of the United States Code.
(v) Medical food, as defined in Section 360ee(b)(3) of Title 21 of the United States Code.
(vi) Fortified oral nutritional supplements used for persons who require supplemental or sole source nutrition to meet nutritional needs due to special dietary needs directly related to cancer, chronic kidney disease, diabetes, malnutrition, or failure to thrive, as those terms are defined as by the International Classification of Diseases, Tenth Revision, or other medical conditions as determined by the department.
(C) A refillable thermoform plastic container that ordinarily would be returned to the manufacturer to be refilled and resold.
(D) A plastic beverage container subject to the California Beverage Container Recycling and Litter Reduction Act (Division 12.1 (commencing with Section 14500)).
(E) A thermoform plastic container of a resin type for which the total amount of the resin type sold in California annually is either of the following:
(i) Less than 1,000,000 pounds for a resin type other than expanded polystyrene.
(ii) Less than 40,000 pounds of expanded polystyrene.
(F) A thermoform plastic container that is designed to be composted, is eligible to be labeled “compostable” pursuant to Section 42357, and composts in a safe and timely manner according to the requirements established in regulations adopted pursuant to paragraph (1) of subdivision (e) of Section 42370.2.

42376.
 (a) Thermoform plastic containers offered for sale, sold, distributed, or imported in or into the state by a producer shall comply with all of the following, as applicable:
(1) On and after January 1, 2025, the total thermoform plastic containers sold or imported by a producer in the state shall, on average, contain no less than 10 percent postconsumer thermoform recycled plastic per year.
(2) On and after January 1, 2028, the total thermoform plastic containers sold or imported by a producer in the state shall meet either of the following requirements, as applicable:
(A) If the recycling rate for a resin type that constitutes thermoform plastic containers equals or exceeds 50 percent for calendar year 2026, the total thermoform plastic containers composed of that resin type sold or imported by a producer in the state shall, on average, contain no less than 20 percent postconsumer thermoform recycled plastic per year.
(B) If the recycling rate for a resin type that constitutes thermoform plastic containers is lower than 50 percent for calendar year 2026, the total thermoform plastic containers composed of that resin type sold or imported by a producer in the state shall, on average, contain no less than 25 percent postconsumer thermoform recycled plastic per year.
(3) On and after July 1, 2030, the total thermoform plastic containers sold or imported by a producer in the state shall meet either of the following requirements, as applicable:
(A) If the recycling rate for a resin type that constitutes thermoform containers equals or exceeds 75 percent for calendar year 2029, the total thermoform plastic containers composed of that resin type sold or imported by a producer in the state shall, on average, contain no less than 20 percent postconsumer thermoform recycled plastic per year.
(B) If the recycling rate for a resin type that constitutes thermoform containers is lower than 75 percent for calendar year 2029, the total thermoform plastic containers composed of that resin type sold or imported by a producer in the state shall, on average, contain no less than 30 percent postconsumer thermoform recycled plastic per year.
(b) In determining a recycling rate for each resin type of thermoform container for purposes of this section, the department may consider data gathered pursuant to any of the following:
(1) The Recycling and Disposal Facility Reporting System established pursuant to Section 41821.5.
(2) Data and information received from producers.
(3) Any other relevant data and information received by the department.
(c) (1) Beginning January 1, 2025, a producer that does not meet the minimum postconsumer thermoform recycled plastic requirements pursuant to subdivision (a) is subject to an annual administrative penalty pursuant to this subdivision. Beginning March 1, 2026, the administrative penalty shall be collected annually, if a reduction has not been approved pursuant to subdivision (f), and calculated in accordance with subdivision (d).
(2) A producer that is assessed penalties pursuant to this subdivision may pay those penalties to the department in quarterly installments. The department may grant a one-time extension, at the discretion of the director, of up to 12 months if needed due to unforeseen circumstances, such as a public health emergency, state of emergency, or natural disaster.
(d) Beginning March 1, 2026, and annually thereafter, the department shall invoice any assessed administrative penalties for the previous calendar year based on the postconsumer thermoform recycled plastic requirement of the previous calendar year. The department shall calculate the amount of the penalty based upon the amount in pounds in the aggregate of virgin and postconsumer thermoform recycled plastic used by the producer to produce thermoform plastic containers sold or offered for sale in the state, in accordance with the following:
(1) The annual administrative penalty amount assessed on a producer shall equal the product of both of the following:
(A) The total pounds of plastic used multiplied by the relevant minimum postconsumer thermoform recycled plastic percentage, less the pounds of postconsumer thermoform recycled plastic used.
(B) Twenty cents ($0.20) per pound for a resin type other than expanded polystyrene, and one dollar ($1) per pound for expanded polystyrene. No more than once during a calendar year, the department may adjust the penalty pursuant to this subparagraph to account for inflation using an inflation factor equal to the percentage change in the Producer Price Index, as published by the Bureau of Labor Statistics of the United States Department of Labor or a successor agency of the United States government, since January 1, 2025, or the date of the most recent increase in the penalty amount, whichever is later. Adjustment to the penalty pursuant to this subparagraph shall be exempt from the requirements of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(2) For purposes of paragraph (1), the total pounds of plastic used shall equal the sum of the amount of virgin plastic and postconsumer thermoform recycled plastic used by the producer, as reported pursuant to Section 42377.
(e) (1) The department may conduct audits and investigations and take an enforcement action against a producer for the purpose of ensuring compliance with this section and the information reported pursuant to Section 42377. The department may take an administrative enforcement action in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code against a producer that fails to pay or underpays the assessed or audited administrative penalty only after notice and hearing.
(2) The department shall keep confidential all business trade secrets and proprietary information about manufacturing processes and equipment that the department gathers or becomes aware of through the course of conducting audits or investigations pursuant to paragraph (1). Business trade secrets and proprietary information obtained pursuant to this subdivision that meet the definition in Section 3426.1 of the Civil Code are exempt from disclosure as otherwise required pursuant to the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code) consistent with Section 7927.705 of the Government Code.
(3) A producer may obtain a copy of the department’s audit of that producer conducted pursuant to paragraph (1).
(f) (1) The department shall consider granting a reduction of the administrative penalties assessed pursuant to subdivision (c) for the purpose of meeting the minimum postconsumer thermoform recycled plastic requirements pursuant to subdivision (a).
(2) In determining whether to grant the reduction pursuant to paragraph (1), the department shall consider, at a minimum, all of the following factors:
(A) Anomalous market conditions.
(B) Disruption in, or lack of supply of, recycled plastic due to an unforeseen circumstance or event, such as a natural disaster.
(C) Other factors that have prevented a producer from meeting the requirements.
(D) If the recycling rate is 60 percent or higher, lack of available supply due to purchases from industries outside of the packaging industry.
(3) In order to receive a reduction of the administrative penalty, a producer shall submit to the department a corrective action plan detailing the reasons why the producer will fail to meet or has failed to meet the minimum postconsumer thermoform recycled plastic requirement and the steps the producer will take to comply with the minimum postconsumer thermoform recycled plastic requirement within the next reporting year. The department may approve the corrective action plan, and may reduce the administrative penalties once it approves the corrective action plan and the producer implements the plan. Administrative penalties shall accrue from the point of noncompliance with the minimum postconsumer thermoform recycled plastic requirement if the department disapproves the corrective action plan or if the producer fails to implement the plan.
(4) A corrective action plan issued by the department shall include a compliance deadline not to exceed 24 months from the date of the original notice of violation and shall include a description of each action the producer shall take to remedy the violation and the applicable compliance deadline for each action. The corrective action plan shall describe the penalties that may be imposed if a producer fails to comply.
(g) Administrative penalties collected pursuant to this section shall be deposited into the Thermoform Recycling Enhancement Penalty Account, which is hereby created in the State Treasury. Moneys in the Thermoform Recycling Enhancement Penalty Account shall be expended upon appropriation by the Legislature in the annual Budget Act for the sole purpose of supporting the recycling, collection, and processing infrastructure of thermoform plastic containers in the state.
(h) If a producer fails to meet the postconsumer thermoform recycled plastic metrics described in subdivision (a), then the producer shall submit by March 1, 2026, and each year thereafter that the producer fails to comply, a letter of explanation to the department describing why it did not meet the postconsumer thermoform recycled plastic goals.
(i) The department may issue a corrective action plan to a noncompliant producer, allowing up to 24 months to come into compliance.
(j) A recycling center may collect thermoform plastic containers.
(k) (1) Subdivision (a) does not apply to thermoform plastic containers used to package dairy products if the department determines pursuant to an application submitted by a dairy products manufacturer or group of dairy products manufacturers that the applicant has demonstrated that any of the following conditions exist:
(A) The use of postconsumer recycled resins violates the federal Food and Drug Administration (FDA) rules or regulations on food packing safety, or regulations by the department adopting guidance from the FDA.
(B) The department may consider the availability of recycled plastic suitable to meet the minimum recycled content requirements, including the availability of high-quality recycled plastic, and food-grade recycled plastic from the state’s and other beverage container recycling programs.
(C) The use of postconsumer recycled resin is not technologically feasible.
(2) If subdivision (a) does not apply to thermoform plastic containers used to package dairy products for any of the reasons specified in subparagraphs (A) to (C), inclusive, of paragraph (1), a producer of dairy products may submit a corrective action plan to the department annually demonstrating the efforts the producer of dairy products is making to address the conditions in subparagraphs (A) to (C), inclusive, of paragraph (1) that prevent subdivision (a) from applying. The corrective action plan shall also include information regarding when the producer of dairy products will comply with subdivision (a).

42377.
 (a) On or before March 1 of each year, a producer shall report to the department, under penalty of perjury, the amount in pounds of all thermoform plastic containers sold in or imported into the state for the preceding calendar year, the number of containers returned and refilled, and the amount in pounds of each type of postconsumer resin used in those containers on standardized forms in the form and manner prescribed by the department.
(b) The department shall post the information reported pursuant to subdivision (a) within 30 days on the department’s internet website.
(c) The producer shall maintain records of all sales, purchases, exports, and information regarding the source of any postconsumer resin for verification purposes as required by the department.
(d) The producer shall register and pay a registration fee to the department for the reasonable regulatory costs that are directly related to implementing and enforcing reporting described in subdivision (a).

42379.
 (a) Except as provided in subdivision (c), neither of the following is a violation of the statutes specified in subdivision (b):
(1) An action pursuant to this chapter solely to increase the collection, processing, and recycling of scrap plastic materials by a producer that affects scrap values, the quantities of materials being recycled, or the method of invoicing the sale of thermoform plastic containers.
(2) The formation of a nonprofit organization that may include two or more producers and that establishes specifications for different grades or classifications of thermoform plastics, which may affect the scrap value of those grades or classifications, the quantity or quality of materials being recycled, or the method of invoicing the sale of thermoform plastic containers, but does not establish the value of such materials.
(b) The following statutes are not violated by an action specified in subdivision (a):
(1) The Cartwright Act (Chapter 2 (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code).
(2) The Unfair Practices Act (Chapter 4 (commencing with Section 17000) of Part 2 of Division 7 of the Business and Professions Code).
(c) The exemptions in subdivision (a) from the statutes specified in subdivision (b) shall not apply to any agreement between two or more producers establishing or affecting the price of plastic materials, including, but not limited to, virgin plastic, postconsumer recycled plastic, and thermoform plastic products, or the output or production of thermoform plastic products, or any agreement restricting the geographic area or customers to which thermoform plastic products will be sold.

SEC. 3.

 The Legislature finds and declares that Section 2 of this act, which adds Chapter 6.2 (commencing with Section 42375) to Part 3 of Division 30 of the Public Resources Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:
In order to appropriately protect the trade secrets and other proprietary materials of businesses, it is necessary to limit access to the proprietary information of businesses complying with the postconsumer recycled plastic requirements for thermoform plastic containers.

SEC. 4.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.