USA Recycling, Inc. v. Town of Babylon
| Citation | 66 F.3d 1272 |
| Decision Date | 19 September 1995 |
| Docket Number | No. 2,1814,Nos. 1818,D,2,s. 1818 |
| Parties | , 64 USLW 2186, 25 Envtl. L. Rep. 21,522 USA RECYCLING, INC.; Friendly Carting, Inc.; Joseph Carione; Angelo Carione; Jean I. Carione; Louis Carione; and Carl R. Fucci, Plaintiffs-Appellees, v. TOWN OF BABYLON; Town of Babylon, New York, Commercial Garbage District; Town Board of the Town of Babylon; Richard H. Schaffer, Supervisor; Francine V. Brown, Councilwoman; Patrick Haugen, Councilman; Robert Kaufold, Councilman; Anthony Tafuri, Councilman; and Babylon Source Separation Commercial, Inc., Defendants-Appellants. A.A. & M. CARTING SERVICE, INC.; Farmingdale Carting Service, Inc.; Natale Pepe Waste Corp.; PGS Carting Co., Inc.; Joseph S. Celano; Marianne Celano; JC Industries, Inc.; C.B.S. Rubbish Co., Inc.; Farmingdale Industrial Park Association; Minersfuel Company, Inc.; Resource Conservation Corp., Plaintiffs-Appellees, v. TOWN OF BABYLON, NEW YORK, Commercial Garbage District, also known as Commercial Waste Collecting and Recycling District; Town Board of the Town of Babylon; Richard H. Schaffer; Babylon Source Separation Commercial, Inc., Defendants-Appellants. ockets 95-7129, 7131. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Frank L. Amoroso, Nixon, Hargrave, Devans & Doyle, Garden City, NY, for municipal defendants-appellants.
Anthony E. Core, Mineola, NY, for defendant-appellant BSSCI.
Betty Jo Christian, Steptoe & Johnson, Washington, DC, for plaintiffs-appellees A.A. & M. Carting Service et al.
Frederick Eisenbud, Cahn, Wishod & Lamb, Melville, NY, for plaintiffs-appellees USA Recycling, Inc., et al.
(Gordon J. Johnson, Deputy Bureau Chief, Environmental Protection Bureau, John J. Sipos, Assistant Attorney General, Dennis C. Vacco, Attorney General of the State of New York, for Amicus Curiae State of New York).
Before: NEWMAN, Chief Judge, VAN GRAAFEILAND and CABRANES, Circuit Judges.
For ninety years, it has been settled law that garbage collection and disposal is a core function of local government in the United States. At their option, cities may provide garbage pick-up to their citizens directly (that is, through town employees or an independent contractor), or they may rely on a closely regulated private market to provide those services. In 1905, the Supreme Court turned away two challenges, brought on takings and due process grounds, to city ordinances in San Francisco and Detroit that gave a single scavenger firm the exclusive right to collect and dispose of city garbage. California Reduction Co. v. Sanitary Reduction Works, 199 U.S. 306, 26 S.Ct. 100, 50 L.Ed. 204 (1905); Gardner v. Michigan, 199 U.S. 325, 26 S.Ct. 106, 50 L.Ed. 212 (1905). Although in neither of these cases did the Court address whether the municipal waste systems comported with the Commerce Clause, we squarely face that question today.
The Town of Babylon, New York, has elected to take over the local commercial garbage market. Rather than assemble a municipal waste disposal bureaucracy and purchase directly the necessary equipment, the Town has hired one private company to pick up all commercial garbage, and another to operate an incinerator where that garbage is burned. Businesses and commercial property owners finance this system by paying the Town flat property taxes and user fees tied to the amount of garbage they generate. No private companies, local or out-of-state, may collect commercial garbage in Babylon.
The plaintiffs in these consolidated cases argue that the Supreme Court's decision in C & A Carbone, Inc. v. Town of Clarkstown, --- U.S. ----, 114 S.Ct. 1677, 128 L.Ed.2d 399 (1994), has stripped local governments of their long-settled authority to collect and dispose of town garbage. In Carbone, the Supreme Court struck down a municipal ordinance that required private garbage haulers to process all town garbage at a single, privately owned local transfer station. Likewise, the present plaintiffs argue, Babylon has in effect created monopolies in the waste collection and disposal markets by taking over both markets and then hiring independent contractors to provide services on the Town's behalf. This system, they contend, discriminates against interstate commerce and therefore violates the Commerce Clause.
We disagree. Babylon's waste management plan, which so closely resembles those approved by the Supreme Court in California Reduction and Gardner, neither discriminates against, nor imposes any incidental burdens on, interstate commerce. In reaching that conclusion, we reject the plaintiffs' contention that the Carbone decision fashioned from the "dormant" Commerce Clause a new, and unprecedentedly sweeping, limitation on local government authority to provide basic sanitation services to local residents and businesses, on an exclusive basis and financed by tax dollars. Such a limitation, to borrow the words of the Supreme Court, Reeves, Inc. v. Stake, 447 U.S. 429, 441, 100 S.Ct. 2271, 2279-80, 65 L.Ed.2d 244 (1980) (citation omitted).
The United States District Court for the Eastern District of New York (Thomas C. Platt, Chief Judge ) entered a preliminary injunction against the Town of Babylon's implementation of its waste management plan. The court held that plaintiffs in these consolidated cases, USA Recycling and A.A. & M. Carting, had demonstrated that their challenge to the Town's system was virtually certain to succeed in light of the Supreme Court's recent decision in Carbone, --- U.S. at ---- - ----, 114 S.Ct. at 1682-84. We find that plaintiffs have failed to demonstrate a likelihood of success on the merits, because Babylon's system does not violate the dormant Commerce Clause. The district court also erred by granting injunctive relief despite its explicit finding that plaintiffs will not suffer irreparable harm from implementation of Babylon's new waste management system. Because plaintiffs have not made the requisite showings for preliminary injunctive relief, we reverse.
At the heart of the dispute is the relationship between the Town of Babylon, an incinerator built in Babylon at the behest of the Town ("Incinerator"), and a private garbage hauler hired by the Town (Babylon Source Separation Commercial, Inc., or "BSSCI"). First, we describe the circumstances surrounding the construction and operation of the Incinerator. Second, we describe the town's creation of a commercial garbage district in the wake of the Supreme Court's decision in Carbone. Three aspects of Babylon's waste management plan merit special attention. First, the Town has licensed and hired BSSCI to collect all garbage within the district and has refused to renew the licenses of any other private haulers to collect garbage pursuant to individual contracts with town businesses. Second, the Town permits BSSCI to dispose of town waste at no charge at the Incinerator. Third, the Town finances its commercial garbage collection and disposal system by charging a flat $1500 benefit assessment to commercial property owners, plus a schedule of user fees to individual businesses for garbage they generate beyond a fixed base amount. The facts set forth below are not in dispute.
In the Long Island Landfill Law of 1983, 1 the New York Legislature set deadlines for Babylon and neighboring towns to shut down their municipal dumps, which were contaminating the aquifer that serves most of Long Island. Because closing its landfill would leave Babylon with a shortage of garbage disposal options, the town began to consider building a garbage incinerator. This choice was consistent with the State of New York's articulated policy preference for incinerators (or "resource recovery facilities," as they are also known) over landfills, because "trash-to-ash" facilities reduce the volume of solid waste, put garbage to productive use by generating electricity, and were deemed to be less harmful to the environment. See N.Y.ENVTL.CONSERV.LAW Sec. 27-0106 (McKinney Supp.1995). 2 To promote its hierarchy of recycling and disposal preferences, New York created a statutory framework that enables towns to contract with private companies to build and operate incinerators and other solid waste management facilities. N.Y.GEN.MUN.LAW Sec. 120-w (McKinney 1986 & Supp.1994). The State Legislature also passed a law specifically authorizing Babylon to enter into contracts to build a garbage incinerator. 1985 N.Y.Laws 478 Sec. 4(1).
With state approval (if not encouragement) in hand, and in accordance with the bidding procedure detailed in New York General Municipal Law Sec. 120-w(4)(e) (McKinney 1986), 3 Babylon solicited proposals from more than sixty-nine companies in eighteen states and Canada to construct and operate the Incinerator. Out of the five companies that submitted bids, Ogden Martin Systems, Inc. ("Ogden") was awarded the contract. Ogden is a New Jersey corporation with a Delaware parent.
To finance construction of the Incinerator, the Town of Babylon Industrial Development Agency (the "Agency"), a "public benefit corporation" created under New York law and controlled by the Town, issued $88.9 million in tax-exempt bonds. 4 The land on which the Incinerator was built is owned by the Town, leased to the Agency, and subleased to Ogden. The Incinerator itself is owned by the Agency and leased to Ogden, which operates the facility.
Under a 1985 Service Agreement between Babylon and Ogden (the "Agreement"), the Town has an unconditional obligation to pay Ogden a Service Fee for operating the...
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