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Big Decision Coming for the California Carpet Stewardship Program

January 2016

Product Stewardship & Sustainability Report

In 2010, California passed AB2398,1 creating a carpet stewardship program that placed the burden of managing post-consumer carpet on industry rather than local government. When the program was created, many thought that its consumer fee element would be a favorable precedent for solving funding concerns faced by other state stewardship programs. However, the carpet stewardship program has raised many of the same issues for industry that unfunded requirements on manufacturers create. The carpet industry now faces uncertainty as it awaits a decision in January 2016 on whether the state agency, CalRecycle, will accept recent changes to the current carpet stewardship plan.

California’s carpet stewardship statute requires manufacturers of carpet sold in California to join a carpet stewardship organization. To date, only one carpet stewardship organization has been created: the Carpet America Recovery Effort (CARE). CARE was required to submit a carpet stewardship plan to CalRecycle, the state agency charged with overseeing the stewardship program, for approval. The plan must include an assessment per square yard of carpet sold, to be added by manufacturers to the carpet price and remitted to CARE. The statute requires CARE to spend the funds only on implementing the program, including subsidizing those who process and recycle post-consumer carpet.

The statute also requires CARE submit an annual report to CalRecycle showing “meaningful progress” in increasing carpet recycling and reuse. CalRecycle is to determine, based on this report, whether CARE is in compliance with the statute’s requirements. Lack of compliance can lead to civil penalties and limit all carpet manufacturers’ carpet sales in California.

The statute initially set the assessment level at $0.05 per square yard. In December 2014, CARE submitted and CalRecycle approved Addendum #1 to its Carpet Stewardship Plan. It raised the assessment level to $0.10 per square yard. In September 2015, CalRecycle reviewed CARE’s annual report and found CARE noncompliant, in part for failure to raise adequate funds to provide sufficient subsidies to processors, which CalRecycle asserted had led to insufficient increases in recycling and reuse. CalRecycle required CARE submit an additional Addendum to the Plan to explain how CARE would address the issues and become compliant.

In response, on November 30, 2015, CARE submitted Addendum #3, which proposed to further raise the assessment to $0.20 per square yard. This Addendum is currently under consideration by CalRecycle. It will be discussed at a public meeting on January 26, 2016, and action upon the revision by CalRecycle is expected at the meeting or shortly thereafter.

It is unclear what the decision will be. CalRecycle indicated in its finding of noncompliance that if the Addendum did not adequately address its concerns, the Agency might initiate an enforcement action. Alternatively, CalRecycle may accept the addendum for now, but signal its intention to revisit the issue later this year.

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1AB 2398 is codified at Chapter 20 of California’s Public Resources Code, Cal. Pub. Res. Code §§ 42970-42983.