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May 27, 2009

Associated Press

Judge temporarily blocks NY water deposit law

NEW YORK (AP) _ A federal judge on Wednesday temporarily blocked a new law requiring return deposits on water bottles sold in New York state, calling the law unconstitutional.

U.S. District Judge Thomas P. Griesa issued an order that will stop enforcement of the law while water bottlers work to have it changed.

Griesa said in court that a provision of the law requiring that water bottles carry special labels to help ensure they are sold only in New York violates the U.S. Constitution's commerce clause.

The judge said the water bottlers "not only have a likelihood of success, they are sure of success as a matter of law" in their challenge of the new law.

The law, which was slated to take effect Monday, adds bottled water to the list of beverages on which consumers pay a deposit of 5 cents per bottle. The deposits already are collected on bottles of carbonated beverages, wine coolers and beer.

It also allows the state to begin collecting 80 percent of unclaimed deposits on all beverages which require deposits, including water. Bottlers had been keeping that money. The state budget assumed total unclaimed state deposit collections of $115 million for the year, including $29 million from water bottles, said Budget Division spokesman Jeffrey Gordon.

The judge's ruling does not prevent the state from collecting unclaimed deposits from other beverages.

Lawmakers passed the law as part of the state budget, and Gov. David Paterson signed it in early April.

In court, attorney Adam Charnes argued for Nestle Waters North America and other bottlers that forcing companies to create bottles that can only be sold in New York would result in substantial revenues losses and price increases for consumers.

He said bottlers need to be able to market their products in all states and need more time to properly prepare for changes such as setting up a system to collect deposits on water bottles.

Nestle Waters chief executive officer, Kim Jeffery, said the company strongly supports laws that encourage recycling, promote consumer health and apply to all beverages. But he said the New York law fails to accomplish those goals.

The state attorney general's office had no immediate comment on the judge's ruling.

Environmentalists said the new deposits will promote recycling of the 3.2 billion water bottles sold annually in New York. The law increases the handling fee paid to retailers and redemption centers from 2 to 3.5 cents per container.

Water bottlers, however, say they have a problem with a requirement that they put New York-specific bar codes on bottles.

Jeffrey has said his company, which sells Poland Springs among other brands, has a problem either way. With New York codes, they will need additional warehouse space for New York water. Without them, they could be overwhelmed in New York taking back bottles sold in other states without mandatory deposits, he said.

Laura Haight, senior environmental associate for the New York Public Interest Research Group, said they believe Paterson should be held responsible for a small issue with coding that has grown into "a mess."

Paterson spokeswoman Erin Duggan said the governor's staff had not yet seen a copy of the court's order and declined to comment on it. She noted that the governor last week submitted legislation to address some of the concerns raised about the new law.

Legislation pending in the state Assembly would postpone the bar-code requirement until January. A measure proposed last week by the Paterson administration would postpone the deposits for a month and the higher handling fee for four months, eliminate the state-specific code and create a two-tier handling fee where big retailers like supermarkets get only 2.5 cents per container. A Senate measure would postpone water bottle deposits until Oct. 1 and eliminate the state-specific code.


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