Governor Gavin Newsom signed Assembly Bill 1201 (AB 1201) into law on October 5, 2021, enacting new restrictions on environmental marketing claims made to California consumers. AB 1201 extends the state's existing restrictions of several environmental marketing claims for plastic products—including "biodegradable" and "compostable" claims—so that they now arguably cover all consumer products sold in the state. In light of California's long history of publicly enforcing its "greenwashing" laws under the state's Unfair Competition Law (UCL), companies that make environmental claims for their products would be well-advised to review their marketing claims and assess compliance under AB 1201 before the new restrictions become effective on January 1, 2022. California's enactment of this state-specific law is also a good reminder that a manufacturer's risk assessments for marketing claims must include both the FTC guidelines and the patchwork of state laws governing these claims.
Prior Restrictions on "Biodegradable" and "Compostable" Marketing Claims
Since 2013, California Public Resources Code section 42357 has restricted the types of environmental marketing claims companies may place on the label of "plastic products," defined as "a product made of plastic, whether alone or in combination with other material." Section 42357 provides that companies may only label plastic products as "compostable" or "home compostable" if these products meet one of two specific ASTM standards or have OK compost HOME certifications. In addition, Section 42357 restricts the use of the terms "biodegradable," "degradable," or "decomposable"—public enforcers take the position that section 42357 completely prohibits the use of these terms while some businesses contend that these terms may be used on products that meet applicable standards and specifications.
Expansion of Restrictions to Cover All Consumer Products
AB 1201 expands section 42357's existing restrictions so that they apply to all "consumer products," defined broadly as "a product or a part of a product that is used, bought, or leased for use by a person for any purpose." However, there is a vague limitation in the law that potentially exempts fiber products that do not incorporate any plastics or polymers. Public enforcers would likely take the position that AB 1201 effectively prohibits the labeling of any consumer product sold in the State of California as "biodegradable," "degradable," or "decomposable." What is clear, however, is that (with very limited exceptions) AB 1201 severely restricts when companies may market any consumer product as "compostable" or "home compostable." Manufacturers and suppliers must also be prepared to provide documentation showing a product's compliance with AB 1201 within 90 days of a request by any member of the public.
Effect of AB 1201 and Enforcement
The impacts of AB 1201 are expected to be felt nationwide, as manufacturers are generally unable to segregate the distribution of their products between California and the rest of the country. Any manufacturer that fails to comply with AB 1201 risks prosecution under the UCL by public enforcers—who may seek penalties of up to $2,500 per violation—or a civil action by private enforcers who may seek injunctive relief and restitution under the UCL, as well as attorney fees under California's private attorney general statute. California district attorneys have brought multiple actions concerning "biodegradable" claims on plastic products under the prior version of section 42357 that led to six- or seven-figure settlements.
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Should you have any questions about AB 1201 or need any assistance reviewing your environmental marketing claims, please reach out to any of the authors. We would be delighted to help.
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