California regulations on diverting organic waste go into effect January 1: new rules affect municipalities and food sector, bring opportunities for composting and biofuel businesses

In January 2022, California’s SB 1383 regulations targeting short-lived climate pollutants (SLCPs) will begin to take effect. CalRecycle will begin enforcement starting January 1, 2022. The regulations aim to reduce SLCP emissions by diverting organic waste from landfills, thereby reducing the methane gas produced by the decay of such wastes.

SB 1383’s implementing regulations impose significant burdens on municipalities and an array of private actors, including waste haulers and processors, restaurants, groceries, and hotels.  They also provide significant opportunities for businesses working in the composting and biofuel sectors to grow while combatting climate change.

Reductions in landfill waste and recovery of organic waste

SB 1383 aims to reduce organic waste disposal in the state by 75 percent before 2025. The regulations define “reduction” in very specific ways – disposal only at recycling centers, compostable material handling operations, in-vessel digestion operations, biomass conversion operations, use for erosion control and revegetation in specific circumstances, and use as animal feed. Disposing of waste in any other way does not constitute “reduction.”

Because the regulations explicitly allow for the disposition of waste at biomass conversion facilities (defined as facilities that produce heat, fuels, or electricity using organic waste), these new regulations incentivize municipalities to support biofuels industries.

To achieve this goal, by January 1, 2022 all cities and counties that provide trash services must have food recycling programs in place and must adopt ordinances consistent with SB 1383 and its regulations. The ordinances must mandate that organic waste generators, haulers, and other entities subject to SB 1383 comply with its regulations.

Beginning in January 2022, most jurisdictions must also meet targets for “recovered organic waste product.” Id. at § 18993.1(a). These targets are calculated annually using a per-resident target of .08 tons. A jurisdiction may satisfy the requirement by procuring compost, renewable gas, electricity from biomass conversion, or mulch.

There are also new regulations for waste processing facilities, which must meet an annual average mixed waste organic content recovery rate of 50 percent beginning on January 1, 2022, and 75 percent on January 1, 2025. The regulations describe how these percentages must be measured and require records demonstrating compliance. They also impose a limit of no more than 20 percent of incompatible materials in organic waste as of January 1, 2022.

Also beginning January 1, 2022, any hauler providing organic waste collection service must identify whether the material is collected from source-separated or mixed waste collection streams. Receiving facilities must begin reporting disposal of organic waste. Recycling and composting facilities will also have to begin reporting the percentages of organic waste contained in materials sent to landfill disposal.

Edible food recovery programs

SB 1383 also addresses the waste of edible food and food insecurity. Its regulations require jurisdictions to implement “edible food recovery programs.” Food recovery programs must educate and monitor “commercial food generators,” as well as increase the capacity for edible food recovery if a jurisdiction does not have sufficient capacity. Jurisdictions must keep records showing their compliance with the edible food recovery program requirement, including lists of food recovery organizations, lists of food generators who have agreements with them, and documentations of all the actions the jurisdiction has taken.

Grocery stores, food distributors, and wholesalers will be required to donate edible food items that would otherwise be thrown away. Large event venues, hotels, restaurants with more than 250 seats, and other facilities with on-site dining will have to do the same in 2024.

The burdens on “food generators” are significant. Both grocery stores and large event venues must “arrange to recover the maximum amount of edible food” possible. To do so, they must contract with food recovery organizations. Grocery stores must comply unless they can show “extraordinary circumstances” that are beyond their control. The regulation goes on to define “extraordinary circumstances” and limit them to only two circumstances: the failure of the jurisdiction to increase recovery capacity, and acts of god. In an enforcement action, the burden of proof will be on the grocery store to demonstrate extraordinary circumstances.

Like jurisdictions, private entities subject to these rules must also keep detailed records demonstrating their compliance. This includes both “food generators” and “food recovery services.”

Enforcement and penalties

SB 1383 imposes enforcement requirements on jurisdictions and gives enforcement authority over jurisdictions to CalRecycle.

Individual jurisdictions must have inspection and enforcement programs overseeing compliance by businesses and residences. They are required to conduct inspections of grocery stores, distributors, wholesalers, and food recovery organizations to ensure compliance. Beginning January 1, 2024, jurisdictions must initiate enforcement actions if violations are found.

CalRecycle oversees the compliance of individual jurisdictions. If jurisdictions are in violation, the department will issue a Corrective Action Plan for the jurisdiction.

CalRecycle may also enforce against waste generators if doing so would be more effective than enforcement by any individual jurisdiction, or if a jurisdiction fails to take enforcement action.

Penalties for noncompliance by private entities are escalating, starting at $50-$100 per violation for the first violation and going up to $250-$500 per violation for third and subsequent violations. Penalties to be imposed on noncompliant jurisdictions increase with the severity of the violation, starting at $500 per violation per day for “minor” violations, and escalating to $10,000 per violation per day for “major” ones.

Pitfalls and opportunities

The Department of Agriculture’s regulations implementing SB 1383 are detailed and complex. They will affect operations for public and private entities, including local governments, waste facilities, and grocery stores and restaurants. As more regulations implementing SB 1383 come into effect in the coming years, the demand for permissible ways to dispose of organic waste will only increase. Entities that find themselves in the organic waste chain could face penalties for failures to comply with the regulations and any local ordinances adopted to enforce them, and businesses that provide services necessary for compliance will benefit.

Those who produce and process organic waste should take stock of their operations and ascertain whether they comply with SB 1383, its regulations, and any local ordinances that have been adopted. Close attention should be paid to proposed local ordinances as municipalities ready themselves for compliance. Those poised to fill critical needs created by SB 1383 should take this opportunity to position themselves. As more stringent requirements come into effect in the coming years, businesses able to position themselves well now likely will see their opportunities improve.

DLA Piper continues to monitor this and other developments in the SLCP arena, and our lawyers can identify risks and assist clients positioning themselves to pursue unique opportunities presented by SB 1383. To understand how SB 1383 and its regulations might affect your business, please contact DLA Piper’s Commodities group at DLAPiperCommodities@dlapiper.com  or any of the authors.