Industry seeks ‘boots on the ground’ in California EPR battle

La Jolla, Calif. — A prominent California plastics industry leader is urging a "boots on the ground" lobbying effort around the state's ambitious plastics packaging EPR law, arguing that an unusual decision by Gov. Gavin Newsom to hit pause on the plan is creating an opening.

Kevin Kelly, CEO of Emerald Packaging in Union City and a board member at both the Western Plastics Association and the Flexible Packaging Association, said at the Plastics News Executive Forum that the industry needs to make a public push around the state's extended producer responsibility law, knowns as SB-54.

On March 7, Newsom rejected regulations developed by his own agency, CalRecycle, to implement SB-54, which passed in 2022. He ordered the agency to try again.

"We've got a year to influence regulations in California," said Kelly, speaking March 11 at the PN event in La Jolla. "This is a boots-on-the ground game. I'm telling you right now that donating to your legislators and visiting them is the way to have influence on these issues."

Newsom said the SB-54 plan that CalRecycle had finished was too expensive for small businesses and families.

The governor's decision earned praise from business groups like the California Chamber of Commerce and scorn from environmentalists, who called it a betrayal.

Kelly, however, called parts of SB-54 a de facto ban on some plastics packaging, particularly flexibles, because it "has goals that are impossible to hit."

It requires, for example, a 65 percent recycling rate for single-use plastic and foodware by 2032, as well as a 25 percent reduction in such products.

"You have to have your feet in front of the people that are making the laws and regulations," Kelly said. "You have to be donating to the folks who understand us and the predicament we're in."

Another speaker at the event, Matt Seaholm, the president and CEO of the Plastics Industry Association in Washington, raised the possibility of new legislation, beyond whatever new regulations CalRecycle may come up with, because SB-54 has proven difficult to implement.

"I think we're going to be forced to let the dust settle and see where it will shake out, but we're going to be committed to getting workable policy in place, whether that's a bill that the Legislature ultimately brings up or if CalRecycle takes another run at this and ultimately gets this where it needs to be," Seaholm said.

Outside of politics, Kelly said efforts to make plastic packaging greener face major roadblocks because consumer brands and the public are generally not interested in paying more.

He said Emerald, which does $100 million in sales a year making fresh produce packaging, has tried without success to get its customers to buy packaging with 30 percent post-consumer plastic (PCR).

"We've been trying to get our customers to take PCR for the last two or three years, with an FDA no objection letter, and we've made almost no headway," Kelly said. "The big issue with all of this is this question of who will pay."

He said Emerald basically gave away its product with recycled plastic, because its customers in the produce industry don't want packaging that raises prices they have to charge to the public.

"We introduced 30 percent PCR into our packaging about a year and a half ago, and we gave it away for free to one of our largest customers," Kelly said. "It went all the way across their product line, with 500,000 pounds of PCR replacing 500,000 pounds of virgin plastic. But unfortunately, the only way they would take it was for me to give it away."

He said Emerald had previously publicly committed to having 50 percent of its plastic come from recycled materials by 2025.

"We missed it by about 90 percent because our customers wouldn't take it, because their customers wouldn't pay for it," Kelly told the audience at the Plastics News event.

He had sharp words for some retailers and grocers, displaying charts which he said showed the relatively low cost of environmentally friendly packaging and saying decisions from those industries are hurting plastics companies.

"Walmart, Kroger, everybody thinks they won't pay for it," he said. "Well, they won't pay 4 percent more for a compostable packaging. They won't pay a fraction of a penny for PCR.

"It just astounds me," Kelly said. "So because of the retailers and the grocers being stubborn, the plastics industry gets screwed. We're the ones who catch it going downhill."

The scars of not hitting his own company's 2025 commitments prompts Kelly to say that the broader plastics industry should steer clear of any making public goals.

"I think the industry has to be honest — we shouldn't be making 2030 commitments because I don't think we'll hit them," Kelly said. "We didn't hit the 2025 commitments; we're not going to hit the 2030 ones because the market isn't actually there to support it."