California’s Rash Plastic Lawsuit Is Anti-Growth And Anti-Environment

California Attorney General Rob Bonta’s plastics lawsuit against ExxonMobil may be astute politics but it is terrible policy. This lawsuit is rife with contradictions. Frivolous lawsuits are also a large and growing pall hanging over the economy.

Many studies have documented the high costs frivolous lawsuits impose on Americans. According to the Institute for Legal Reform, frivolous lawsuits cost the U.S. economy $443 billion in 2020. These costs ultimately raise the prices of the goods and services we purchase every day, which means that tort abuse imposes a $3,621 annual tax on every household.

Attorney General Bonta’s lawsuit, along with the lawsuit filed by environmental groups making similar accusations, is no different. As I noted in a previous Forbes column, the lawsuit accuses ExxonMobil of fraudulently promoting plastic recycling as a solution to the problem of plastic waste while, at the same time, state and local governments in California have promoted, and continue to promote, the exact same solution – plastic recycling.

There are many instances of these contradictions.

When California Governor Gavin Newsom was mayor of San Francisco he promoted the practice as an essential part of his efforts to establish the “toughest recycling law” in the nation. Through CalRecycle, California state and local governments continue their long-standing promotion of plastic recycling.

According to CalRecycle, “on June 30, 2022, Governor Gavin Newsom signed SB 54 (Allen, 2022) into law to address the impacts of single-use packaging and plastic food service ware.” The law requires that by 2032, the use of single-use plastic is reduced by 25%, 65% of single-use plastic is recycled, and 100% of single-use plastic is recyclable.

If promoting plastic recycling is deceptive when ExxonMobil does it, why is it not deceptive when the Governor promotes the same activity? Isn’t CalRecycle being deceptive when it continues to promote plastic recycling today? These differences in treatment raise serious concerns regarding the AG’s lawsuit.

Also noteworthy, AG Bonta’s own constituents are supportive of expanding plastics recycling. According to a January 27^th poll, “63% [of Californians]

want the state to expand and improve its recycling infrastructure to find ways to give a new life to plastics. That compares to only 27% who prefer the state eliminate single-use plastic and stop manufacturing new plastics.”

Moreover, whether plastic recycling is an economically viable option is not the relevant question. Some analyses are pessimistic about the value of plastic recycling. For instance, a commentary for the New Jersey Institute of Technology noted that “today, recycled plastic generally costs more to refine and buy than new plastic.”

There are other analyses that, while noting obstacles remain, assert that there are reasons for optimism. As a 2020 McKinsey analysis concluded,

Our recent research has shown substantial value-creation potential in capturing plastic waste and using existing technologies to process it to make new plastics and other chemicals. To date, however, investments to translate this potential into reality have been relatively small. Globally, only around 15 percent of plastics produced each year get recycled.

It follows from the McKinsey report that investments to translate this potential into reality are needed to support more efficient plastic waste management.

There are sound reasons to believe that investing in advanced recycling technology can provide great value. For example, Exxon’s advanced recycling facility in Baytown, Texas has processed more than 70 million pounds of plastic waste into new products to date.

There are fewer reasons to believe that Governors, Attorneys General, or other state leaders can be effective arbiters of which innovative technologies have the potential to add value, and which do not. Instead, innovation is best fostered when millions of private businesses and budding entrepreneurs guide capital allocation and assess risk.

In practice, preemptive judgements on novel technology by experts and political leaders often age poorly – after all, Henry Morton (a contemporary of Thomas Edison and president of the Stevens Institute of Technology) called Edison’s light bulb “a conspicuous failure.”

Ultimately, it is the private sector that drives innovation forward. The AG’s legal action is another demonstration of California’s growing hostility toward businesses and innovators. Beyond the lawsuit’s strong anti-growth and anti-consumer impacts, it obstructs the very creative processes necessary to more effectively manage the plastic waste problem.