Update on the Bigger Better Bottle Bill

In my May Environmental Update, I detailed the requirements in the “Bigger Better Bottle Bill,” New York’s newly expanded returnable beverage container law.  This new Returnable Container Act, which was signed into law in early April 2009, contained many amendments, including four major and controversial new provisions: (1) deposits would now be required on certain water drinks including flavored water and nutritionally enhanced water (previously water bottles were excluded); (2) bottlers and distributors would now be required to return 80% of all unclaimed deposits to the State’s general fund (previously these unclaimed deposits were kept by the bottlers) (3) the handling fee would be increase from 2 cents per container to 3.5 cents per container and (4) deposit initiators would be required to produce new labels for containers offered for sale in New York which would have a “New York State specific” UPC bar code identifying the container as being offered for sale exclusively in New York. These new requirements were scheduled to be implemented within a few months of the enactment of the new statute, with all to be in place by June 1, 2009.

However, in late May, a coalition of bottled water companies, including Nestle Waters North America and the International Bottled Water Association, filed suit in federal District Court against the State to block the new law’s provisions, arguing that they were unconstitutional. In its complaint, the coalition argued that the new law violated the Constitution’s Equal Protection and Commerce Clauses. The water company coalition also sought a preliminary injunction enjoining the enforcement of the new law’s requirements.

On May 29th, District Court Judge Griesa’s enjoined the new bottle bill amendments until April 1, 2010 to “allow persons subject to the amendments sufficient time to comply with the law’s requirements.” In addition, finding that the plaintiffs were highly likely to prevail on their claim that the New York specific UPC amendment is unconstitutional as a violation of the Commerce Clause, Judge Griesa enjoined the implementation and enforcement of this new requirement.

Thereafter, the State moved to modify Judge Griesa’s Preliminary Injunction Order, asserting that the Court’s Order delaying implementation until April 1, 2010 was overly broad. The State also sought a ruling that the invalid provisions should be severed from the law and the remaining provisions be kept intact and enforceable. The motion was heard by District Court Judge Batts.

In her August 13, 2009 Order, Judge Batts found that the record supports the conclusion that the plaintiffs do not need until April 1, 2010 to comply with most of the new bottle bill amendments. With respect to new requirements regarding beverages other than bottled water, the Court rejected plaintiffs’ due process argument and found these amendments are “unquestionably supported by a rational basis.” Thus, the increase in handling fees and the requirement that 80% of unclaimed deposits were found not to violate plaintiffs’ substantive due process. Judge Batts, therefore, lifted the Court’s previous injunction on all amendments to the bottle bill not related to bottled water.

As to the new requirements relating to bottled water, the Court found that the new law’s original deadlines were indeed too short. However, the Court noted that the plaintiffs’ appeared to be able to meet the new requirement as to bottled water by October 1st. Thus, the Court ordered plaintiffs to come before the Court on October 22, 2009 and show cause why due process requires that the Court’s original injunction relating to bottled water should remain in effect.

Finally, the Court agreed with Judge Griesa’s opinion that Plaintiffs were highly likely to prevail on their claim that the New York specific UPC requirement is violates the Commerce Clause. Thus, Judge Batts ruled that the Court’s previous injunction relating to the New York exclusive UPC provision was to remain in full force and effect.

On September 14, 2009, Judge Batts issued another Order, responding to a letter from intervenor plaintiff, American Beverage Association, ruling that her August 13th Order with respect to amendments for which the injunction was lifted was not intended to be retroactively applied. Thus, the increased handling fee (from 2 cents to 3.5 cents) would only apply to containers accepted on or after August 13, 2009, not June 1st as originally specified in the new law.

Due to scheduling issues, the October 22nd hearing before Judge Batts did not take place. Instead, on October 23rd, Judge Batts issued a new order upon review of submissions by all of the parties. The Court permanently enjoined enforcement of the New York specific UPC requirement. Further, the Court ruled that as of midnight October 30, 2009, the injunction on the new amendments relating to bottled water were lifted. Thus, the five cent deposit rules and the increased handling fee apply to bottled water as of October 31st.

In an interesting new twist, on October 26th, the New York Association of Convenience Stores announced that New York State officials agreed to grant retailers an extra one-week grace period beyond the October 31st deadline to allow stores to sell off non-deposit bottled water product already in their inventory prior to Judge Batts’ October 23rd ruling. Thus, deposits (and redemption) on water bottles bearing the "NY 5¢" label will begin as scheduled at 12:01 a.m. October 31, 2009. However, retailers will apparently be able to sell bottled water with and without the 5 cent deposit label during this grace period. However, on midnight November 7th, all bottled water without the 5 cent deposit label must be removed from the retailers’ shelves.