Manufacturers Sue Dallas Over Bag Law

DALLAS (CN) - Dallas' controversial partial ban on single-use bags imposes an illegal five-cent-per-bag tax and is preempted by state law, four plastic bag manufacturers claim in a lawsuit.

Hilex Poly Co., Superbag Operating Ltd., the Interplast Group Ltd. and Advanced Polybag Inc. sued the city in Dallas County Court on May 1.

Hilex operates three manufacturing facilities in and around Dallas and employs hundreds of residents in "high-paying manufacturing jobs," according to the 19-page complaint. All four plaintiffs sell bags to retailers in the city.

In place since January, the ordinance requires retailers to collect the five cent "environmental fee" for each single-use carryout bag, plastic or paper.

The Dallas City Council approved the ordinance in March 2014, seeking to promote a "culture of clean."

"The city of Dallas desires to protect the natural environment, the economy, and the health of its residents," the ordinance states. "The improper disposal of single-use carryout bags has a negative impact on the environment by contributing to unsightly ugliness on the streets, sidewalks, trees, bushes, vacant lots, city parks, waterways, reservoirs and shorelines that is detrimental to the quality of life of residents, the property values of homeowners, and the tourism industry."

The littering requires hundreds of volunteer hours to remove the bags from trees, lots and roadways, the city said at the time.

In spite of the good intentions of the city, the "environmental fee" is still an impermissible tax, the bag makers argue.

"It raises more revenue than is reasonably necessary to subsidize the city's efforts to insure compliance with the ordinance," the complaint stated. "The tax imposed by the ordinance is not authorized by the Texas Constitution or Texas statutes. It is not a property tax, a hotel occupancy tax, or one of the miscellaneous other taxes a city may impose. Nor is it a permissible sales tax. A city may impose a sales and use tax only if approved by a majority of voters in an election."

The plaintiffs also cite a 2014 opinion by then-Texas Attorney General Greg Abbott that concluded such bag bans are in violation of state law.

State Rep. Dan Flynn, R-Van, had asked Abbott for his opinion, citing concern with the perceived abuse of power by municipalities.

"It's not about Austin, it's all about state authority and the power grab by some cities over state law, that's just about the easiest way to say it," Flynn said at the time.

The bag makers claim they have lost sales of single-use bags in the Dallas market as a result of the ban. They are now required to perform several "short" manufacturing runs that "imposes inefficiencies and adds considerable expense" the make bags, among other things.

Although not parties to the lawsuit, citizens and retailers are harmed by the fee for bags "that were free of charge before the ordinance," the complaint stated.

First Assistant City Attorney Chris Bowers said in a statement Friday that "the city will continue to act in the best interest of the health, safety and welfare of its residents."

Bowers noted Hilex Poly's claims "directly contradicts" the company's purported support for a bag fee when the ordinance was under consideration.

Council member Dwaine Callaway told NBC-affiliate KXAS-TV the city plans to fight the lawsuit.

""We can't be a green city if we are going to lay down to this," he said Friday. "We want a clean environment and a clean city."

A Texas retailers' trade group sued Austin in 2013 over the city's total ban of single-use bags.

Both bans prompted State Rep. Matt Rinaldi, R-Irving, to file House Bill 1939 on Feb. 25. It would allow businesses to provide customers with bags or containers "made from any material" at the point of sale.

"An ordinance or regulation adopted by a municipality purporting to restrict or prohibit a business from, require a business to charge a customer for, or tax or impose penalties on a business for providing to a customer at the point of sale a bag or other container made from any material is invalid and has no effect," the bill states.

Rinaldi said he filed the bill to repeal bans "like those enacted by Dallas and Austin, which erode consumer choice and the rights of business-owners."

"Gov. [Greg] Abbott warned that 'Texas is being Californianized and you may not even be noticing it," Rinaldi posted on his Facebook account. "It's being done at the city level with bag bans, fracking bans, tree-cutting bans. We're forming a patchwork quilt of bans and rules and regulations that is eroding the Texas model. I agree."

The bag makers seek an injunction and declaratory relief for violations of the Texas Health and Safety Code. They are represented by James B. Harris with Thompson Knight in Dallas.

Follow @davejourno

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