Retail Legal Updates
This client alert highlights new legal developments impacting our retail clients conducting business in the States of California and New Jersey.
California's State-wide Single-use Carryout Bag Ban
The State of California recently passed the first ever state wide single-use carryout bag ban. California's Governor, Jerry Brown, signed Senate Bill No. 270 into law on September 30, 2014 (the "Law"). The provisions of the Law have varying effective dates, either July 1, 2015 or July 1, 2016, depending on the type of retail Store in operation. The Law applies to "Stores." which are defined as "grocery stores and convenience stores " and does not awlv to other types of retailers. All capitalized terms used herein are defined in SB 270. A link to the full text of SB 270 is provided below.
The Law prohibits grocery and convenience Stores from providing Single-use carryout bags to customers at the point of sale and requires that Recycled Paper Bags, Reusable Grocery Bags, or Compostable Bags be made available for purchase at a ten cent fee.
Beginning January l, 2015, large, full-line grocery Stores shall not provide Single-use carryout bags to a customer, and shall make available for purchase, at 0.10 cents per bag, Recycled paper bags, Reusable grocery bags, or Compostable bags at the point of sale. Beginning July 1, 2016, the same prohibition and obligation will extend to certain convenience food Stores as defined in the Law.
The Law lists the requirements and composition of the Recycled paper bags, Reusable grocery bags, and Compostable bags. Each type of reusable bag, whether plastic or paper, has specific content make-up and labeling necessities imposed by the Law.
The money a Store collects from the ten cent fee charged per Reusable, Recyclable paper, or Compostable bag is retained by the Stores for the costs associated with complying with the Law, i.e., actual costs of providing Recycled paper bags, Reusable grocery bags, or Compostable bags, and the costs associated with a Store's educational materials/campaign.
Reusable Grocery Bag Producer Requirements
A producer of Reusable grocery bags must provide proof of certification to the Department of Resources Recycling and Recovery that such bags are produced in accordance with the Law. Proof of certification must be resubmitted on a biennial basis, or at any time a modification that is not solely aesthetic is made to a previously certified reusable bag. A producer of Reusable grocery bags must also submit applicable certified test results to the Department to confirm such bags meet the requirements of the Law.
A city, county, or state may impose civil liability on a person or entity that knowingly violates or reasonably should have known that it violated the Law in the amounts of: (1) $1,000 per day for the first violation, (2) $2,000 per day for the second violation, and (3) $5,000 per day for the third and all subsequent violations. The Law preserves any existing city, county or other local public agency's ordinance, resolution, regulation or rule in effect before September 1, 2014. Thus, such ordinances, resolutions, regulations or rules continue to be implemented and enforced by the local governments. SB 270 preempts any ordinance. resolution. regulation or rule passed on or after September 1. 2014.
Analysis of Carryout Bag Ban
Large grocery Stores with those requirements listed in the Law will have to comply with SB 270 by July 1, 2015. Certain smaller convenience Stores regulated by the Law will not have to begin compliance until July 1, 20 16. All Stores subject to SB 270 will also need to establish a complying at-store recycling program .
SB 270 is a state-wide initiative to unify local regulation of Stores providing Single-use carryout bags, reduce waste, and to promote use of Reusable grocery bags, Recycled paper bags, and Compostable bags. SB 270 also prohibits cities and local public agencies from implementing new laws relating to those bags passed on or after September 1, 2014. Accordingly, if you operate a grocery or convenience store in California, we encourage you to review SB 270 to ensure compliance. We have been actively tracking plastic bag legislation on behalf of our retail clients the past few years and can provide additional, detailed guidance upon request.
If you have any questions or would like to discuss SB 270 further, please do not hesitate to contact us. To see the full text of SB 270, please cut and paste the following link into your web browser: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?biIIid=201320l40SB270.FinCEN
Geographic Targeting Order -Los Ange les Fashion District
On October 2, 2014, the Financial Crimes Enforcement Network ("FinCEN") announced the issuance of a Geographic Targeting Order ("GTO") that imposes additional reporting and recordkeeping obligations on certain trades and businesses located within the Los Angeles Fashion District, which is the "Covered Geographic Area" under the GTO. The Covered Geographic Area is defined in the GTO as "the area in the City of Los Angeles, California, south of East 81 Street, north of East 16111 Street and between Santee Street and South Central Avenue."
The GTO requires "Covered Businesses" to report the receipt of cash in excess of $3,000 in one transaction or two or more related transactions in a 24-hour period. Covered Businesses that receive cash in excess of $3,000 in such a transaction or transactions must file a Form 8300 report with FinCEN. "Covered Businesses" under the GTO include: (i) garment and textile stores, (ii) transportation companies, (iii) travel agencies, (iv) perfume stores, (v) electronics stores (including those that only sell cell phones), (vi) shoe stores, (vii) lingerie stores, (viii) flower/silk flower stores, (ix) beauty supply stores, and (x) stores bearing "Import " or "Export" in its name.
The GTO takes effect October 9, 20 14 and will be effective for 180 days. Failure to comply with the GTO could lead to a criminal indictment for owners and/or operators. To obtain a copy of the GTO, please visit: http://www.fincen.gov/newsroom/nr/pdf/LAGTOOrder9-25-14.pdf.
Gift Card Law Update -Zip Code Collection Requirement
We have previously provided updates to our retail clients regarding New Jersey's Gift Card Laws, including the State of New Jersey's attempt to require retail gift card issuers to collect name and address information from gift card purchasers, including, at minimum, the purchaser 's zip code ("Zip Code Collection Requirement "). Several retail organizations, including the New Jersey Retail Merchants Association ("NJRMA"), have lobbied heavily for the repeal of the Zip Code Collection Requirement before its effective date of July 1, 2016.
Recently, the efforts of the NJRMA and other organizations have proved fruitful. Pending before the New Jersey General Assembly are New Jersey bills A-3480 and S-2235 ("NJ Bills"). The NJ Bills would eliminate the Zip Code Collection Requirement. The NJ Bills were introduced in the Summer of 2014 to both the Senate and House of Representative s. The Senate has passed the NJ Bills. We expect passage in the House of Representatives in the next few weeks and that the Governor will sign the NJ Bills into law in the next few months. We will continue to monitor the NJ Bills and provide updates as new information becomes available. If you have any questions regarding the status of the NJ Bills, please do not hesitate to contact us.