On Thursday August 13, 2009, Judge Deborah A. Batts of the United States District Court in Manhattan ruled that certain provisions of the Bigger Better Bottle Bill (“Bill”) could be implemented immediately. This ruling followed the issuance of a preliminary injunction in May that halted enactment of the entire Bill until April 1, 2010. Judge Batts’ ruling determined that:
- NY State may begin collecting 80% of the unclaimed deposits on all non-water bottled beverages from the bottling industry;
- The beverage industry is required to increase the handling fees paid to redemption centers for taking empty bottles;
- All provisions involving “bottled water” cannot go into effect until at least October 22, 2009 when a follow up hearing will be held; and
- No decision was rendered on the New York-specific UPC bar code.
The Bill, which was passed in April, was challenged in May when Nestle, the Polar Corp., and the International Bottled Water Association (collectively, the “water companies”) filed suit in the U.S. District Court for the Southern District of New York. The water companies claimed that the Bill was unconstitutional because it violated the Dormant Commerce Clause, the Equal Protection Clause, and Substantive Due Process of the U.S. Constitution. Judge Thomas P. Griesa of the United States District Court in Manhattan ruled in favor of the water companies when he determined that certain provisions of the Bill were unconstitutional. In particular, the requirement that a NY State-specific UPC be placed on all bottles sold in the state was found unconstitutional due to infringement on interstate commerce. For more information on Judge Griesa’s reasons for issuing the preliminary injunction see our prior post on that ruling.
Following the injunction halting the Bill’s implementation, NY State Attorney General Andrew Cuomo (“A.G.’s Office”), moved for an emergency hearing to modify Judge Griesa’s order. The A.G.’s Office was particularly concerned that delay in implementing the Bill would cost the State $86 million by March 31, 2010 because the Bill includes a provision that requires the beverage companies to turn over 80% of their unclaimed deposits to the State for environmental programs and general disbursement through the fund. After the Bill’s passage, its projected revenue figures were included in the State’s 2010 budget, and early estimates suggested that as much as $115 million a year could be generated from the collection of unclaimed deposits. The A.G.’s Office also argued that the $10,000 bond should be increased to as much as $115 million to account for the State’s significant loss in revenue because the preliminary injunction delayed the State’s ability to collect the unclaimed deposits.
Judge Batts’ order first acknowledged that each party was in agreement that the State Legislature had to review and modify the NY State-specific UPC requirement. As a result, the State did not press the NY State-specific UPC issue and Judge Batts did not answer any questions relating to it. Next, the order modified the Bill’s provisions relating to all bottled beverages other than water. Specifically, the provisions regarding the State’s ability to collect 80% of unclaimed deposits and the increase to the current handling fee from 2 cents to 3.5 cents were found constitutional because they were created as a “rational means to increase State revenue.” Order at 8.
In addition, the order addressed the Bill’s provisions relating to bottled water and found that legal questions remained as to whether the Bill’s requirement that the bottled water industry be in compliance by October 1, 2009 violated due process. This issue will be addressed further at an October 22, 2009 hearing. Finally, Judge Batts refused to increase the $10,000 bond by finding that balancing the Plaintiff’s likelihood of success on their Dormant Commerce Clause challenge as well as the hardship to Plaintiffs posting such a large bond against the loss to the State as a result of the Court-ordered injunction does not merit an increase in the bond amount.” Order at 11-12.
As a result of the emergency hearing, a majority of the Bill’s provisions can now be implemented. The only provision that remains enjoined is the requirement that a NY-specific UPC be created. The due process question regarding the Bill’s bottled-water provisions will be heard on October 22, 2009.