California’s Plastics Law Is Creating A Compliance Nightmare Before Businesses Even Know What They Owe

California’s sweeping plastics law has already cost an out-of-state manufacturing company its largest customer, its CEO said in a court filing.

Plastilite Corporation President and CEO Jon Ehly detailed the alleged financial damage in an Aug. 10 filing supporting a multi-state effort to block California’s Plastic Pollution Prevention and Packaging Producer Responsibility Act. Under this law, out-of-state manufacturers selling to California may have to adapt their packaging to comply with rules governing a market containing roughly 11.5% of the U.S. population.

Representatives of Plastilite’s largest customer, also a Nebraska-based company, met with Ehly in May 2025 and raised concerns about the effect California’s law would have on its business, according to filing.

The customer sells meat products online, including millions of steaks annually, and ships them nationwide using Plastilite’s expanded polystyrene (EPS) foam coolers, according to Plasilite’s press release.

The California law was expected to add approximately one dollar to the cost of a typical three-dollar EPS cooler, the filing states.

Several weeks later, Plastilite learned that the customer would no longer use its EPS coolers to ship frozen meat and had instead selected a foil-lined cardboard box produced by another company, according to Ehly’s filing.

The customer said the switch was based at least in part on complying with California’s law and its desire for a product it viewed as more “curbside friendly,” according to the declaration.

The switch exposes a distinction between whether packaging is recyclable and whether consumers can place it in their curbside recycling bins, Ehly wrote in the filing.

Plastilite’s EPS products are 100% recyclable, and the company recycles all of the scrap EPS foam generated during manufacturing, according to the court filing. The company offers fully biodegradable products made with 30% recycled post-consumer materials, Ehly said.

“Not every product that is recyclable is ‘curbside friendly,’ and not every ‘curbside friendly’ product is recyclable,” Ehly wrote. Plastilite’s laboratory testing found EPS containers “substantially outperformed” cardboard boxes in protecting products from physical damage and spoilage, Ehly added in the filing.

California’s environmental regulations are facing broader scrutiny over their effects on businesses outside the state, with federal regulators and courts confronting disputes over the reach of the state’s environmental policies. The Environmental Protection Agency (EPA) recently moved to reduce federal reliance on California regulators for certifying aftermarket vehicle products.

Earlier in July, the EPA announced that manufacturers can sell certain aftermarket car parts in the other 49 states without first obtaining approval from California regulators, provided they can demonstrate compliance with the federal Clean Air Act through the Specialty Equipment Market Association’s Certified Emissions program. The decision opened access to sales in 49 states for products certified through the Specialty Equipment Market Association (SEMA) program.

Before the change, the California Air Resources Board operated the only certification process recognized by EPA for manufacturers seeking to demonstrate that aftermarket products would not violate federal emissions requirements.

“Americans should not be forced to solely rely on California to certify aftermarket products. Starting today, Americans can trust that products certified by SEMA meet federal requirements and can be used to repair vehicles,” EPA Administrator Lee Zeldin said in the agency’s July 1 press release.

The Supreme Court has also weighed a dispute over the economic effects of California’s environmental regulations, ruling 7-2 in June 2025 that fuel producers had standing to challenge EPA approval of California vehicle emissions regulations. The regulations required automakers to manufacture more electric vehicles and fewer gasoline-powered vehicles in an effort to decrease emissions from gasoline and other liquid fuels.

Justice Brett Kavanaugh, writing for the majority, found that reducing purchases of gasoline and other liquid fuels would cause fuel producers a concrete financial injury. California itself had estimated that the regulations would cause reductions in gasoline demand exceeding $1 billion beginning in 2020 and more than $10 billion by 2030, according to the Court. The Supreme Court did not decide whether California’s regulations were lawful, instead reversing the D.C. Circuit and remanding the case for consideration of the fuel producers’ claims on the merits.

From aftermarket auto parts, gasoline and now plastic packaging, disputes over California’s environmental agenda are increasingly turning on the economic consequences that regulations imposed in the nation’s largest state can have on businesses operating beyond its borders.