BILL ANALYSIS Ó AB 837 SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator S. Joseph Simitian, Chairman 2011-2012 Regular Session BILL NO: AB 837 AUTHOR: Nestande AMENDED: June 20, 2011 FISCAL: Yes HEARING DATE: June 27, 2011 URGENCY: No CONSULTANT: Randy Pestor SUBJECT : FOOD CONTAINER ADVERTISING SUMMARY : Existing law : 1) Authorizes any person who engages, has engaged, or proposes to engage in unfair competition to be enjoined in any court of competent jurisdiction (Business and Professions Code §17203). Actions for any relief may be by a person who has "suffered injury in fact and has lost money or property as a result of the unfair competition" (§17204). 2) Under provisions relating to Environmental Representations Law (§17580 et seq.): a) Requires any person who represents in advertising or on a label that the consumer good it manufactures or distributes is not harmful to, or is beneficial to, the natural environment through the use of certain terms (e.g., "ecologically friendly," "earth friendly," "green product,") or any like term, to maintain in written form certain information and documentation supporting the validity of the representation. This information and documentation must be furnished to the public upon request. b) Prohibits any person from making any untruthful, deceptive, or misleading environmental marketing claim. For purposes of this provision, "environmental marketing claim" must include any claim contained in the "Guides for the Use of Environmental Marketing Claims" published by the Federal Trade Commission. AB 837 Page 2 c) Provides that any violation of the above requirements is a misdemeanor punishable by imprisonment in the county jail not to exceed 6 months, or by a fine of no more than $2,500, or both. 3) Prohibits a food or beverage container from being sold that is labeled "compostable" or "marine biodegradable" unless the food or beverage container meets certain ASTM standards, and prohibits a food or beverage container from being sold that is labeled with the term "biodegradable," "degradable," or "decomposable," or any form of those terms. Certain related provisions, including definitions and penalties, are specified. (§42359 et seq.). This bill enacts the Food Container Recycled Content Law that: 1) Prohibits a manufacturer or supplier from selling a plastic food container in California that is advertised with a specific recycled content amount unless the manufacturer or supplier is able to provide certification of that claim in a format that is easy to understand and accurate. 2) Requires a manufacturer or supplier to submit information and documentation demonstrating compliance with the above requirement within 90 days of the request. A manufacturer or supplier is in compliance with the Law if a link to a document on its Internet Web site contains the required certification and documentation. 3) Sets penalties that may only be imposed by the state with penalties paid to the Attorney General. 4) Provides related definitions and legislative intent. COMMENTS : 1) Purpose of Bill . According to the author, "Existing law establishes certain requirements for plastic products that are labeled as compostable or marine degradable. Those products must meet the specifications established by ASTM Standards. There are no similar requirements for recycled AB 837 Page 3 content claims for plastic packaging. This bill is not intended to establish certification requirements for recycled content claims, but merely requires those manufacturers or suppliers to be able to back up their claims upon request from a member of the public or state agency. The author further notes that "Misleading claims are already actionable under B&P section 17200 and the Federal Trade Commission has established green guides regarding recycled content claims. This bill fills the gap by requiring demonstration/validation of the claim and establishes penalties for failure to comply. While much more prolific in Europe, there are several entities in the U.S. who have processes to certify or verify recycled content claims, like UL Environment and Scientific Certification Systems." According to the author, "AB 837 simply promotes truth in advertising, i.e. stops the practice of 'greenwashing.' Consumers value products with an environmental benefit and many environmental claims go unchallenged. This measure ensures a product marketed with a certain recycled content claim is accurate by holding manufacturers and suppliers accountable for the claim." 2) Current law addresses false or unsubstantiated environmental claims . Under federal law, unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are unlawful. (15 U.S.C. §45). The Federal Trade Commission issues "Guides for the Use of Environmental Marketing Claims" (also referred to as the "Green Guides"). These Guides outline general principles that apply to all environmental marketing claims and provide guidance on specific green claims, including provisions relating to "recycled content" (16 CFR 260.7(d)). According to the FTC, "The Commission has brought law enforcement actions targeting allegedly false or unsubstantiated environmental claims. Because the Green Guides are administrative interpretations of the law, they do not have the force and effect of law and they are not independently enforceable. However, if a marketer makes claims that are inconsistent AB 837 Page 4 with the Guides, the FTC can take action under Section 5 of the FTC Act, which prohibits unfair or deceptive practices." Current law authorizes any person who engages, has engaged, or proposes to engage in unfair competition to be enjoined in any court of competent jurisdiction (Business and Professions Code §17203). Also, under Environmental Representations Law, any person is prohibited from making any untruthful, deceptive, or misleading environmental marketing claim (Business and Professions Code §17580.5). For purposes of this provision, "environmental marketing claim" must include any claim contained in the "Guides for the Use of Environmental Marketing Claims" published by the FTC. As noted above, the Guide contains provisions relating to recycled content. Also, any person who represents in advertising or on a label that the consumer good it manufactures or distributes is not harmful to, or is beneficial to, the natural environment through the use of certain terms (e.g., "ecologically friendly," "earth friendly," "green product,") or any like term, must maintain in written form certain information and documentation supporting the validity of the representation. This information and documentation must be furnished to the public upon request. (§17580). Since federal and state law already address untruthful, deceptive, or misleading environmental marketing claims for consumer goods, the AB 837 food container provisions conflict with those laws. However, it may be appropriate to simply require any person making an environmental claim regarding recycled content under the state's Environmental Representations Law to maintain information supporting the claim that: a) the recycled content has been diverted from the solid waste stream, and b) the claim conforms with the uniform standards for recycled content from FTC's "Guides for the Use of Environmental Marketing Claims." This should not be construed as a limitation on other requirements, and this information should be furnished to any member of the public upon request or provided by a link on an Internet Web site. AB 837 Page 5 3) Support and opposition concerns . According to supporters, "AB 837 promotes truth in advertising by preventing 'greenwashing' of products with claims of recycled content. Currently there are no standards for recycled content of plastic packaging. Consumers value products with an environmental benefit and expect product claims to be substantiated. AB 837 provides the assurance consumers need by requiring manufacturers or suppliers to be able to back up their claims upon request from a member of the public or state agency." According to opponents, "We support efforts to ensure that advertised environmental claims can be properly justified and that producers are not misrepresenting the environmental virtues of their product in order to obtain market advantage. However, we believe this is a solution in search of a problem because there has been no factual demonstration that manufacturers or suppliers have been advertising inappropriate recycled content claims for their packages." Opponents also note that existing federal and state "enforcement tools work." SOURCE : Assemblymember Nestande SUPPORT : Environment California OPPOSITION : American Chemistry Council, California Bottled Water Association, California Chamber of Commerce, California Grocers Association, California League of Food Processors, California Manufacturers and Technology Association, California Nevada Soft Drink Association, California Retailers Association, Grocery Manufacturers Association, International Bottled Water Association