The California Chamber of Commerce has added to its job killer list SB 705 (Allen; D-Santa Monica), which prohibits food vendors from using take-out food containers made from polystyrene foam.

CalChamber has tagged SB 705 a job killer because this mandate would require food vendors and restaurants to use alternative packaging materials that are 2 to 3 times more expensive than polystyrene foam, increasing costs to businesses and consumers to the tune of approximately $150.8 million per year and adding procurement costs to the state of approximately $5.9 million per year.

SB 705 prohibits a food provider from providing prepared food to a customer in an expanded polystyrene food service container beginning January 1, 2020. The bill also authorizes a city, a county, a city and county, or the state to impose civil liability on a person or entity that knowingly

violates that prohibition, or reasonably should have known it was violating that prohibition, in the amount of $1,000 per day for the first violation, $2,000 per day for the second violation, and $5,000 per day for the third and subsequent violations.

In its opposition letter, CalChamber shares a recent analysis highlighting the fiscal impacts and job losses from such a ban:

Cost More Than $150 Million per Year

SB 705 would seriously disrupt a $241 million market and add from $151 million to $184 million in costs to California businesses and consumers. For every $1 spent on foam polystyrene foodservice packaging today, alternatives would cost between $1.76 and $3.

Job Loss

Polystyrene foam disposable food service packaging products are produced near their end user markets in California. A ban would threaten existing manufacturing jobs in California. Research suggests up to 5,000 jobs could be lost when including the direct, indirect and induced effects of a ban.

Increase State Procurement Costs

This proposal would also likely impact the state budget. State agencies and school districts spent an estimated $6.9 million on polystyrene foam foodservice packaging in the 2016 fiscal year. The ban could cost state governments, including state agencies and schools, added annual procurement costs from $5.9 million to $7.1 million.

Overly Burden Restaurant Industry

New restrictions of foodservice packaging would add further cost pressures at a time the state restaurant industry is already coping with rising costs, and consumers are pulling back in the face of compensating rising prices. The data shows that the ability of the state’s restaurant industry to absorb further price increases is limited. Existing cost pressures have already seen prices rising at annual rates around 4%, while prices for competing food at home have been dropping at nearly 3%.

May Decrease State Tax Revenues

If affected businesses are forced to absorb the higher regulatory costs imposed by SB 705, the state could see an estimated loss of $12.6 million in state tax revenues.

Action Needed

SB 705 is on the Senate Appropriations Committee Suspense File, which will be taken up on Thursday, May 25.

CalChamber is urging members to contact their senator and members of Senate Appropriations and ask them to oppose SB 705 as a job killer.