In an effort to reduce waste and plastic pollution, Governor Andrew Cuomo has signed legislation banning single-use carryout plastic bags in New York state. However, the initiative may prove poorly timed, given the state of emergency Governor Cuomo has more recently declared to stop the spread of COVID-19.
The Bag Waste Reduction law took effect on March 1, 2020, but enforcement has been delayed by one month until April 1, 2020 in connection with a lawsuit challenging the law. Encoded in Environmental Conservation Law, the new legislation prohibits any vendor required to collect New York state sales tax from distributing plastic carryout bags to its customers. Whether or not the specific items purchased are subject to sales tax is irrelevant. Carryout bags are provided to customers for carrying tangible personal property. Thus the law affects most retailers of tangible goods in New York state.
The State has launched an education campaign “Bring Your Own Bag New York” (BYOBagNY), and an outreach program to industry associations, including the Food Industry Alliance, the Retail Council, the New York Association of Convenience Stores. Customers are still permitted to use their own plastic bags, and are able to purchase reusable bags from many retailers.
Exemptions from the plastic bag ban
The law exempts plastic bags used in the following situations:
- bags used solely to contain or wrap uncooked meat, fish or poultry
- bags used solely to package bulk items such as fruits, vegetables, grains or candy
- bags used solely to contain food sliced or prepared to order
- bags used solely to contain a newspaper for delivery to a subscriber
- bags sold in bulk to a consumer at the point of sale
- trash bags
- food storage bags
- garment bags
- bags prepackaged for sale to a customer
- 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
- bags provided by a pharmacy to carry prescription drugs.
It is important to understand that these exemptions are item-specific, not industry-wide. For example, pharmacies are permitted to use plastic bags for prescription medications. This does not mean that pharmacies are generally exempt. Other merchandise sold by pharmacies, such as health and beauty aids and over-the-counter medications, may not be distributed in plastic bags.
Penalties for violations of the plastic bag ban
First-time violators will receive a warning notice. Second-time violators will be fined $250, and subsequent violations in the same calendar year will be fined $500. Each non-compliant commercial transaction may be subject to a fine.
Local laws adopted by New York City, Suffolk County and Tompkins County require customers to pay a five-cent fee per paper bag
Jurisdiction in all matters pertaining to plastic carryout bags is vested exclusively in the state, preempting local law. However counties and cities are explicitly authorized to adopt local laws establishing a five-cent “paper carryout bag reduction fee” for each bag provided to the consumer at checkout. Localities imposing the fee beginning March 1, 2020 are Suffolk County, Tompkins County, and New York City.
Retailers within these jurisdictions do not retain any portion of the fee. The fee must be reported and paid to the commissioner of taxation and finance as part of periodic sales tax return. The fee is not included in any amount that is subject to sales tax, and must be collected in addition to any sales tax due on the transaction. Any receipt or invoice furnished to a customer must separately state the paper carryout bag reduction fee and the number of bags provided. Recipients of SNAP (Supplemental Nutrition Assistance Program) and WIC (Women, Infants, and Children nutrition program) are exempt from the five-cent fee, even for items only partially covered by the program.
Any retailer who charges a customer for a paper carryout bag in a jurisdiction that does not impose a fee (or charges in excess of a locally imposed fee) must charge sales tax for this tangible personal property.
Uncertain effect of the plastic bag ban
According to the New York State Department of Environmental Conservation, New Yorkers use more than 23 billion plastic bags a year. Only 10-15% of plastic bags are recycled in the United States. However, paper bags are heavier, more expensive, and take up considerably more storage space. Storage and increased transportation costs for grocers are staggering because of this new law. Because in-store space is dedicated to saleable inventory, large scale stores are now confronted with bringing multiple tractor trailer truckloads of paper bags from their warehouses to stores on a daily basis. Because this process is costly and cumbersome, it is unclear if it will prove more environmentally friendly in the short or long run.
Food and pharmacy retailers are the hardest hit economically by this new law, although most retailers face this challenge. Larger chains with stores located in other states may have already shifted their plastic bag inventories, but smaller retailers may not be as fortunate. All retailers face many difficulties, including paper bag shortages and rising costs.
Given that on March 7, 2020 Governor Cuomo declared a state of emergency as the numbers of novel coronavirus cases in New York continue to rise, the banned single-use plastic bags may reduce the risk of cross-contamination and prevent the introduction of additional sources of pathogens into retail stores. It may be less sanitary for customers to bring their own bags from home, potentially jeopardizing the safety of retail inventory and the overall health and safety of consumers and employees.
For businesses that distribute carryout bags to consumers at the point of sale, it is important to stay fully familiar with law and the applicable exemptions and regulations prior to the April 1, 2020 enforcement date.
This alert does not purport to be a substitute for advice of counsel on specific matters.
Harris Beach has offices throughout New York state, including Albany, Buffalo, Ithaca, Melville, New York City, Rochester, Saratoga Springs, Syracuse, Uniondale and White Plains, as well as New Haven, Connecticut and Newark, New Jersey.