California Postpones Enforcement of Compostable Packaging Standards Pending USDA Decision

CalRecycle confirmed it is extending the AB 1201 compliance deadline on June 11, 2025, granting companies until June 30, 2027, to meet the new requirements.

Key Takeaways

• Effective June 30, 2027, products must meet far more stringent requirements to be labeled as "compostable" or "home compostable."
• Most packaging currently labeled as compostable is not compliant with the Compostable Product Standards Act.
• Companies should monitor regulatory updates to ensure readiness for rapid changes.
• Given increasing scrutiny and potential for litigation under California’s AB 1201, businesses should develop a litigation response protocol.

Background and Regulatory Context

California’s AB 1201 (Compostable Product Standards Act) introduces some of the nation’s most stringent requirements for compostable labeling, which will become effective June 30, 2027. Under the new law, any product labeled as “compostable” or “home compostable” in California must qualify as an allowable agricultural organic input under the U.S. Department of Agriculture’s (USDA) National Organic Program (NOP).

However, the USDA NOP has not yet updated its standards to address the inclusion of compostable products beyond unprinted, virgin paper. This means that most compostable and biodegradable plastics and packaging currently on the market are excluded from being accepted in California’s compost stream. The law is also designed to keep harmful chemicals, such as PFAS (“forever chemicals”), out of compost, further tightening compliance requirements for producers.

This regulatory gap—where AB 1201’s requirements hinge on federal standards that have not yet been updated—creates significant uncertainty for manufacturers, composters, and retailers. The absence of updated federal guidance leaves stakeholders without definitive criteria for compliance, underscoring the urgent need for the USDA to clarify its standards.

AB 1201’s requirements align with California’s broader regulatory push, including SB 54 (Plastic Pollution Prevention and Packaging Producer Responsibility Act), which mandates that by 2032, all single-use plastic in California must be either “recyclable” or “compostable” as defined by state law.

Federal Developments and Extension

The Biodegradable Products Institute (BPI) petitioned the NOP in August 2023 to expand the definition of “compost” to include compostable plastics. The petition was referred to the National Organic Standards Board, which has not yet issued final recommendations. The matter remains under review, and further delays are expected, in part due to recent changes in the federal administration.

Recognizing this uncertainty, AB 1201 allows for a potential five-year extension for products that are, or are likely to soon be, included as allowable organic inputs under federal law. BPI formally requested such an extension from CalRecycle, citing the ongoing federal review process. On June 11, 2025, CalRecycle notified BPI that it is granting a two-year extension, now expiring June 30, 2027. CalRecycle also clarified that no extensions will be granted beyond January 1, 2031.

What This Means for Companies

• Monitor federal and state regulatory developments closely and consider contingency plans for packaging and labeling.
• While there is potential for a five-year extension through January 1, 2031, this is not guaranteed.

Recommended Next Steps

• Evaluate current and planned packaging for compliance with AB 1201 and NOP requirements.
• Develop alternative labeling and packaging strategies in case federal definitions do not change in time.
• Stay engaged with industry groups and monitor regulatory updates to ensure rapid response to changes.
• Given the increasing scrutiny and potential for litigation under AB 1201, develop a litigation response protocol, including identifying key personnel and outside counsel, to ensure a prompt and coordinated defense if a claim is asserted.
• Maintain robust documentation, including certifications, laboratory test results, and third-party verifications substantiating compostability claims. Ensure this documentation is readily accessible in the event of a challenge.