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Can New York Regulate the Entire Fashion Industry?

By Maddy Buck, Esq. on May 03, 2022 11:51 AM

"Green fashion," "ethical fashion," "sustainable fashion." It's not a new concept, but in an industry that sees little regulation, it may have seemed like a lot of talk, ideals, and marketing. No bite.

But all that could change if a bill currently making its way through the New York legislature becomes law. The Fashion Sustainability and Social Accountability Act, known as the "Fashion Act," aims to regulate the apparel industry by setting sustainability reporting requirements on big clothing and footwear companies that do business in New York. And that has fashion companies and retailers across the country worried.

What Does the Bill Require?

The spirit of "sustainable fashion" is to account for the way the fashion industry allegedly exploits the environment and garment workers to create a constant churn of new clothing and footwear. A big goal, to be sure. If the Fashion Act becomes law, it would just tackle the tip of the iceberg, requiring companies to share information about their supply chain on their websites for all to see. The requirements include:

  • Mapping at least 50% of their supply chain (e.g., from cotton in a field to the t-shirt sold in a store)
  • Disclosing targets for reducing the environmental effects of the resources and chemicals used to make their products
  • Identifying the amount of each material they use in their products
  • Sharing the median wages of the workers of their main suppliers
  • Detailing the company's plan for incentivizing suppliers to improve workers' rights
  • Setting goals for reducing environmental and social impacts and annually reporting on them

What Happens if a Company Doesn't Comply?

If companies don't comply, they open themselves up to a fine of 2% of their annual revenues, which would go into a new environmental justice fund in New York. It would be up to the New York attorney general to investigate and determine whether anyone is out of compliance, but "any citizen" could sue anyone they suspect to be out of compliance.

This means that, if you live in New York, you could sue under this law. Your community may even benefit from the environmental justice fund that will collect the penalties from the companies that violate the law.

Who Does This Bill Regulate?

The bill applies to any "fashion retail seller" or “fashion manufacturer" that is “doing business in the state" and has an annual global revenue of more than $100 million. Wait, what? Isn't that basically any large retail business, even if they're not based in New York? Yes, it seems so.

Big fashion businesses that don't do business in New York — if those even exist — would not be covered by this law. Neither would mom-and-pop fashion enterprises in New York or elsewhere. This bill is targeting the big players to push the industry as a whole to improve its practices.

Isn't That What a Federal Law Is For?

Well, that's a good question.

In 2021, Congress did regulate the entire industry, in a very specific way. In the Uyghur Forced Labor Prevention Act, Congress concluded that the use of forced labor of Uyghurs was widespread in the Xinjiang Uyghur Autonomous Region of China and banned the U.S. from importing goods (including cotton, garments, apparel, etc.) from this region. This ban applies across the board in the U.S., and the federal government must enforce it.

And the U.S. Constitution puts Congress in charge of interstate commerce, which means that a state can't step on Congress' toes in that area.

It's not unusual for states to have their own laws that affect the way an industry works in their state and beyond their borders. California is the prime example, in fashion and beyond. California lawmakers banned the sale of new fur in California and required wage-related protections for its garment workers. Since 2010, California requires companies doing business in California and with over $100 million a year in global revenues (sound familiar?), to share with consumers what they are doing to rid their supply chain of any slavery and human trafficking. And at least one of these out-of-state companies appears to be complying.

So Can a State Law Regulate an Industry as a Whole?

The U.S. Supreme Court may soon weigh in on this question. California recently passed a law that requires animals to enjoy a certain standard of living if farmers are selling their meat in California. Iowa hog farmers don't want to follow California's law, so they sued. Although the U.S. Ninth Circuit Court of Appeals concluded that this law did not violate the Commerce Clause because both in-state and out-of-state producers had the same burden to comply with the law, the Supreme Court recently agreed to hear the case.

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