California Gov. Gavin Newsom has vetoed a bill that would have required recycled content in plastic thermoformed packaging, announcing Sept. 19 that he wanted the state to instead focus on implementing a much more ambitious recycling law he signed this summer.
Newsom said he would not sign the thermoform bill, which passed the Legislature in August and would have required up to 30 percent recycled content by 2030, because it would conflict with the much broader plastics extended producer responsibility law, called Senate Bill 54, that the state adopted in July.
"Earlier this year, I signed SB-54, which is the most significant overhaul of California's plastic and packaging recycling policy in state history and goes further than any other state on cutting plastics production at the source," Newsom wrote in his veto statement.
"However, I am concerned this [thermoformed container] bill imposes confusing requirements in conflict with some of SB-54's key provisions, which could unfairly result in duplicative fees and penalties for the same material," he said.
Newsom said SB-54 would create a "comprehensive regulatory framework" that would be better than a "piecemeal" approach in the thermoform bill.
"We should allow CalRecycle to begin its work to implement the reforms required by SB-54 before contemplating any new recycling requirements for individual materials," he said.
Newsom's veto was hailed by industry groups, which had said the thermoform bill was impractical and questioned whether it would work.
The American Chemistry Council echoed Newsom in its statement, saying the thermoform legislation, known as Assembly Bill 2784, would duplicate the EPR law.
"ACC appreciates Gov. Gavin Newsom's veto of AB-2784," said Joshua Baca, ACC's vice president of plastics. "The bill would have duplicated requirements already signed into law in SB-54, resulting in additional fees and regulatory uncertainty for businesses, as well as confusion for consumers, instead of supporting California's transition to a circular economy."
Baca said ACC wants to work on a constructive implementation of SB-54.
But a prominent environmental group in the state, Californians Against Waste, called Newsom's veto a "missed opportunity" because the EPR law will take several years to implement and plastic markets need help now.
"While we are supportive of the objectives in SB-54, the goals of that policy remain five years away and rely on mostly voluntary efforts by the plastics industry," said CAW Executive Director Mark Murray.
"Recycled-content requirements on plastic packaging sold in California — like those in AB-2784 — represent a sure thing," he said. "It would be a mistake for California to abandon direct producer responsibility for recycling while we wait to see if industry can get their act together under SB-54."
Murray said data from the state agency CalRecycle shows that the value of recycled PET, a key material in thermoformed packaging, are crashing and have dropped 75 percent in value in the last six months.
Since the Legislature passed the thermoform bill last month, industry groups had urged Newsom to veto it, arguing that the biggest challenge for PET thermoform markets is a lack of supply because materials cannot be collecting, not lack of demand.
They argued that the fate of recycled thermoforms is tied into the state's complicated bottle bill payment system, which they said creates disincentives for local material recovery facilities to separate out thermoformed PET.
They urged the state to fix problems with the "co-mingled" rate that MRFs are paid for recycled PET.
"We greatly appreciate the governor's acknowledgment of our concerns and we look forward to working to solve the structural inequalities with the co-mingled rate to ensure industry has the opportunity to access the supply necessary to meet the intent of the legislation," said Steve Alexander, president of the Association of Plastic Recyclers.
The thermoform bill had passed the Legislature by somewhat wide margins. The Assembly approved it on a 41-24 vote Aug. 30, a day after the Senate adopted it on a 22-11 vote.
In a statement, the Plastics Industry Association welcomed Newsom's veto, saying it supports some recycled-content requirements but believes AB-2784 would have been confusing with California starting to implement SB-54.
"While we support reasonable recycled-content requirements where they make sense, thermoform to thermoform recycling, in the manner mandated by AB-2784, does not," said Matt Seaholm, president and CEO of the association. "Our industry encourages policy that promotes a responsible, circular economy."
But CAW's Murray said that California will not be able to meet its goals for more circular use of packaging without recycled-content requirements like that in AB-2784.
"California cannot meet its own ambitious circular economy goals until and unless packaging manufacturers are required to buy back the material they push into the economy," he said.
AB-2784 would have required companies selling many types of thermoformed packaging to have 10 percent recycled content by 2025, rising to 20 percent by 2028 and 30 percent by 2030.
It would have exempted packaging for medical devices, drugs and infant formula.
It also would have required companies to pay penalties on shortfalls of the amount of recycled resin they needed to use, at a rate of 20 cents a pound for most thermoformed materials, with the exception of expanded polystyrene, which would have faced a $1 a pound penalty.
By contrast, SB-54 takes a different approach.
It requires most types of single-use plastic packaging to achieve a 65 percent recycling rate by 2032 to be sold in the state, puts in place an EPR system to have companies pay for recycling improvements and requires companies to contribute $500 million a year for a decade to fund plastic cleanups.