The Nickel Report

On October 19, 2020, the New York State Department of Environmental Conservation (“NYSDEC”) will begin enforcing the state’s ban on single-use carryout plastic bags. Enforcement was delayed from earlier this year due to a legal challenge, which has since been resolved. Those persons found to be in violation of the ban face a range of consequences from a simple warning for a first offense and civil penalties thereafter. Grocery stores, retailers, and other establishments in New York that may be the target of enforcement will want to carefully review the provisions of this ban and their obligations going forward.

Bag Waste Reduction Act

The NYSDEC has been targeting plastic bag waste for several years in New York, where it is estimated that 23 billion plastic bags are used annually-each for about 12 minutes and approximately 85 percent of which end up in landfills, recycling machines, waterways, and streets. Enter the Bag Waste Reduction Act, which is codified in the New York Environmental Conservation Law Sections 27-2801 through 27-2809 (“Act”). The Act is essentially comprised of two core components, including: (1) the plastic carryout bag ban; and (2) the paper bag reduction fee.

1. Plastic Carryout Bag Ban

The ban on plastic carryout bags prohibits any “person required to collect tax” from distributing “plastic carryout bags” to its customers unless such bags are “exempt bags.”  NYECL § 27-2803. A person required to collect tax means “…any vendor of tangible personal property subject to the tax imposed by subdivision (a) of section eleven hundred five of the [New York] tax law,” this being New York’s current four percent sales tax on retail sales of tangible personal property. Accordingly, the scope of the law brings many types of retailers within its purview.  “Exempt bags,” however, are excluded from the ban. [1] Consequences for persons found violating the plastic carryout bag ban run from a warning for the first offense to the imposition of civil penalties ranging from $250 to $500 per transaction.

2. Paper Bag Reduction Fee

Separate from the provisions of the plastic carryout bag ban, the Act authorizes a “paper bag reduction fee.” In particular, counties and cities are authorized to impose by local law, ordinance, or resolution a $.05 per bag fee, subject to limited exceptions, when sales tax vendors of tangible personal property provide paper carryout bags. ECL 27-2805.  In those communities that choose to adopt the paper bag reduction fee, this action places additional obligations on retailers, as the fee must be collected, reported, and paid to the New York State Department of Taxation and Finance. This agency’s Publication 718-B (5/20), subject to periodic updates, explains that nine counties and cities in New York have enacted these fees, including: (1) the City of Troy; (2) Suffolk County; (3) Tompkins County; (4) the City of White Plains; and (5) New York City (comprised of five counties).

3. Legal Challenge

In the first quarter of 2020, the NYSDEC adopted 6 NYCRR Part 351 in order to, among other things, implement the prohibition on plastic carryout bags. Certain parties, including a plastic bag manufacturer, retailers using plastic bags, and others, brought suit challenging the Bag Waste Reduction Act, as well as the regulations promulgated by the NYSDEC. This challenge delayed the NYSDEC’s enforcement of the plastic carryout bag ban, from its original effective date of March 1, 2020.

By a decision dated August 20, 2020, a New York State Supreme Court Justice largely rebuffed the challengers’ assertions. In an interesting twist, however, and at the urging of certain amici parties, the Court struck down portions the NYSDEC regulations that would have exempted certain types of plastic bags. In the eyes of the amici, these provisions, had they been allowed to stand, would have created a loophole that would have allowed the distribution of “thick” plastic carryout bags beyond the types of statutorily defined “exempt bags.” To acknowledge the Court’s ultimate decision, the NYSDEC has now stated that certain portions of its regulations “… have been declared invalid and will not be enforced …”

Conclusion

With the NYSDEC’s announcement that it will now begin enforcing the plastic carryout bag ban as of October 19, 2020, potentially impacted retailers have a short window of time to ensure that their operations will be compliant with this ban. Sometimes regulatory enforcement is inevitable, however, retailers who proactively implement measures now and anticipate a heightened enforcement presence may be able to avoid costly civil penalties in the future.

[1] An exempt bag “…means a bag: (a) used solely to contain or wrap uncooked meat, fish, or poultry; (b) bags used by a customer solely to package bulk items such as fruits, vegetables, grains, or candy; (c) bags used solely to contain food sliced or prepared to order; (d) bags used solely to contain a newspaper for delivery to a subscriber; (e) bags sold in bulk to a consumer at the point of sale; (f) trash bags; (g) food storage bags; (h) garment bags; (i) bags prepackaged for sale to a customer; (j) plastic carryout bags provided by a restaurant, tavern or similar food service establishment, as defined in the state sanitary code, to carry out or deliver food; or (k) bags provided by a pharmacy to carry prescription drugs.”  NYECL § 27-2801(1).