California appeals court rules in favor of 10-cent bag fee

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WASHINGTON -- The ban on plastic bags and the 10-cent fee for paper bags that came with it in the Los Angeles area is not considered a tax that requires voter approval, according to a ruling last week by a state appellate court.

The California Court of Appeal for the Second District ruled against plastic bag manufacturer Hilex Poly Co. LLC and a group of unincorporated Los Angeles County residents, saying that the fee can stand. The paper bag charge is not a tax and not in violations of California Proposition 26, wrote the judges in the 3-0 decision, "because the charge is payable to and retained by the retail store and is not remitted to the county."

But the bag battle is expected to continue, with Hilex Poly lawyers already planning an appeal to the state Supreme Court.

"We respectfully disagree with the court's ruling. We continue to believe that the 10-cent bag 'charge' is a violation of Proposition 26, which mandates that 'any levy, charge or exaction of any kind imposed by a local government' must be approved by local voters. We intend to seek Supreme Court review," said James Parrinello, of Nielsen Merksamer Parrinello Gross & Leoni LLP, in a statement.

Proposition 26 was approved by California voters in November 2010 and requires a two-third vote in both chambers of the state legislature for new statewide fees and taxes, and a two-thirds vote in local communities for the adoption of local fees and taxes. It also broadened the definition of a tax to include many fees but makes exception for "reasonable" fees to cover the cost of a product or service.

The suburban Los Angeles ban on plastic bags and establishment of fees for paper ones took effect in July 2011 for larger stores and January 2012 for smaller stores. Hilex Poly, a leading thin film manufacturer and recycling firm based in Hartsville, S.C., along with four California residents, have been battling the ordinance in court since October 2011.

Mark Murray, executive director of Californians Against Waste, says while it's their prerogative to move forward, he does not foresee any traction for continued battles against the plastic bag ban or the paper bag fee.

"The courts have now spoke twice," Murray said. "And local governments haven't been hesitating because of this pending decision. Cities and counties have continued to move forward [with plastic bag bans and fees] without skipping a beat."

Concern for cleaner oceans and waterways have been a major driver in the support behind the 65 county and municipal plastic bag ordinances that have been enacted since San Francisco first banned plastic bags in 2007.

Mark Daniels, senior vice president for sustainability and environmental policy at Hilex Poly, continues to contend that such bans and fee programs are not the answer.

"Bans and taxes on plastic bags will not help solve the litter problem. Plastic bags only make up a fraction of one percent of waste overall. The truth is plastic bags are a better option than reusable and paper bags – both of which have greater environmental impacts," he said in a statement issued Feb. 25. "Unfairly targeting plastic bags only makes it more expensive for families to shop."