On Friday, May 29, 2009, Judge Thomas P. Griesa of US District Court in Manhattan issued a preliminary injunction, halting the implementation of the “Bigger Better Bottle Bill” (the “Bill”) until April 1, 2010. The Bill represents the expansion of the current Bottle Bill, known as the New York State Returnable Container Act, N.Y. Envtl. Cons. L. 27-1000 (1982). Originally enacted in 1982, the Bottle Bill combats the problem of beverage can or bottle litter, by requiring containers—aluminum cans, glass, and plastic bottles for soft drinks, mineral and soda water, as well as beer and liquor—to carry a five cent deposit. Retailers, distributors, redemption centers, and bottlers are required to collect and redeem the five cent deposit on such beverage containers.
The Bill sought to expand the definition of “container” by including all bottles of water sold in the state. Governor David A. Paterson’s office introduced the Bill to the state Legislature in January 2009, with a definition of “water” that included drinks made with sugar, such as juices, iced teas, or sports drinks. The state legislature was hesitant to accept this definition and after negotiations, the Bill redefined “water” to include “any beverage identified through the use of letters, words or symbols on its product label as a type of water, including any flavored water or nutritionally enhanced water, provided, however, that ‘water’ does not include any beverage identified as a type of water which a sugar has been added.” N.Y. Envtl. Cons. L. § 27-1012.10.
Some New Yorkers found the distinction between water with sugar added and water with no sugar added particularly odd since last year Governor Paterson’s office introduced legislation to place an “obesity tax” on all drinks made with sugar. The “obesity tax” legislation was dropped shortly after it was introduced but the distinction between types of water was passed along with the Bill in April. Judith Enck, Governor Paterson’s Deputy Secretary for the Environment, recently answered questions about the distinction, stating that “[t]he Legislature only wanted to do water” and that “this was a necessary compromise to get the bill through.”
In addition, the Bill requires all bottled beverages sold in NY to have a special NY State-specific product code (UPC) registered with the State. The Legislature included this provision as a means of preventing bottles sold and purchased outside of the state from coming into the state for the five cent redemption. The provision states “such universal product code shall be New York state specific, in order to identify the beverage container as offered for sale exclusively in New York state, and as a means of preventing illegal redemption of beverage containers purchased out-of-state.” N.Y. Envtl. Cons. L. § 27-1012.10.
The Bill also includes a provision requiring beverage companies to return 80% of the unclaimed deposits to the state’s General Fund. N.Y. Envtl. Cons. L. § 27-1012.4. Recent estimates suggest that the amount of unclaimed deposits could reach as much as $115 million in 2010 (pdf). Some of the funding is slated to go towards environmental protection projects, while the rest is being considered for general disbursement throughout the State’s budget.
The Bill passed in April and was supposed to go into effect on June 1, 2009. However, in May, Nestle, the Polar Corp., and the International Bottled Water Association (collectively “water companies”) filed suit in the U.S. District Court for the Southern District of NY against the implementation of the Bill. The water companies claimed that the Bill was unconstitutional because it violated the Dormant Commerce Clause, the Equal Protection Clause, and Substantive Due Process.
In particular, the water companies argued that the requirement of a state specific UPC label identifying water containers “offered for sale exclusively in New York State” violated the Dormant Commerce Clause. N.Y. Envtl. Cons. L. § 27-1012.10. The water companies also claimed that the Bill’s exemption of water containing sugar from the definition of “water” violated Equal Protection. Finally, the water companies cited the unreasonably short amount of time to implement many of the Bill’s provisions as a violation of substantive due process.
Late last week, the water companies’ request for a preliminary injunction was granted. Judge Griesa’s order enjoined the enforcement of all provisions of the Bill until April 1, 2010, citing the allegedly “impossible” deadline for compliance with the Bill. This will give water bottlers and distributors additional time to reach compliance with the Bill’s other provisions. Judge Griesa’s order also found the requirement that a NY State-specific UPC be placed on all bottles sold in the state unconstitutional due to infringement on interstate commerce. In the court transcript, Judge Griesa acknowledged the Legislature’s concern of potential fraud from out of state bottles seeking redemption. However, Judge Griesa made it clear that “[r]egardless of the purpose of the legislature in enacting this provision, the provision is a violation of the commerce clause.”
The problem Judge Griesa noted was that the Bill required bottles with the UPC to be marketed exclusively in NY. This action would prevent commerce of the bottles sold outside of NY by making it illegal to sell the bottles outside of NY State. Judge Greisa did not address the water companies’ Equal Protection claim, but such claims are generally difficult to prevail on absent a plaintiff in a protected class which allows heightened scrutiny of a law.
The preliminary injunction may have the Bill on pause but it does not appear to be the end of the Bill. The New York Times has reported that Governor Paterson’s office is working with the State Legislature on modifications to the law. A spokesperson for Governor Paterson also told reporters that they were reviewing Judge Griesa’s order and considering an appeal.
