Inc. Village Rockville Centre v. Hempstead

• Decision Date: 01 August 1998
• Docket Number: Docket No. 98-9571
• Parties: (2nd Cir. 1999) INCORPORATED VILLAGE OF ROCKVILLE CENTRE; INCORPORATED VILLAGE OF ATLANTIC BEACH; INCORPORATED VILLAGE OF EAST ROCKAWAY; INCORPORATED VILLAGE OF FLORAL PARK; INCORPORATED VILLAGE OF GARDEN CITY; INCORPORATED VILLAGE OF LYNBROOK, Plaintiffs -- Counter-Defendants -- Appellants, v. TOWN OF HEMPSTEAD; TOWN BOARD OF THE TOWN OF HEMPSTEAD on behalf of THE TOWN REFUSE DISPOSAL DISTRICT, Defendants -- Counter-Claimants -- Appellees
• Court: U.S. Court of Appeals — Second Circuit

Page 395

196 F.3d 395 (2nd Cir. 1999)

INCORPORATED VILLAGE OF ROCKVILLE CENTRE; INCORPORATED VILLAGE OF ATLANTIC BEACH; INCORPORATED VILLAGE OF EAST ROCKAWAY; INCORPORATED VILLAGE OF FLORAL PARK; INCORPORATED VILLAGE OF GARDEN CITY; INCORPORATED VILLAGE OF LYNBROOK, Plaintiffs -- Counter-Defendants -- Appellants, v. TOWN OF HEMPSTEAD; TOWN BOARD OF THE TOWN OF HEMPSTEAD on behalf of THE TOWN REFUSE DISPOSAL DISTRICT, Defendants -- Counter-Claimants -- Appellees.

Docket No. 98-9571

August Term, 1998

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Argued: August 9, 1999

Decided: November 18, 1999

Appeal from that portion of the final judgment of the United States District Court for the Eastern District of New York (Denis R. Hurley, Judge) granting summary judgment for defendants. Affirmed.

PETER J. MASTAGLIO, Cullen and Dykman, Garden City, N.Y., for Plaintiffs -- Counter-Defendants -- Appellants.

SY GRUZA, Beveridge & Diamond, P.C., New York, N.Y., for Defendants -- Counter-Claimants -- Appellees.

Before: CALABRESI, CABRANES, and SOTOMAYOR, Circuit Judges.

CALABRESI, Circuit Judge:

Plaintiffs-appellants, the incorporated Villages of Rockville Centre, Atlantic Beach, East Rockaway, Floral Park, Garden City, and Lynbrook (the "Villages"), appeal from that portion of the final judgment of the United States District Court for the Eastern District of New York (Hurley, Judge), entered November 9, 1998, which grants defendants' motion for summary judgment. We affirm.

BACKGROUND

From the ubiquitous and relentless flow of our nation's solid waste has emerged another steady stream -- dormant Commerce Clause litigation challenging various methods by which municipalities have sought to dispose of their garbage. This case centers on the constitutionality of the agreements entered into by the defendants, Town of Hempstead and Town Board of the Town of Hempstead on behalf of the Town Refuse Disposal District (collectively, the "Town"), with each of the plaintiff Villages.

Under a long-standing arrangement that lasted until early 1984, the Villages sent their waste to the Town's two landfills. The Villages paid for the Town's disposal services through a per-ton "tipping" fee.

The landscape of disposal options changed, however, when the New York Legislature passed the Long Island Landfill Law of 1983, N.Y. Envtl. Conserv. Law 27-0704 (McKinney 1997), which required municipalities to phase out the use of landfills, "prohibited development of new landfills in deep flow groundwater recharge zones, and designated resource recovery, incineration, or composting as the preferred alternatives for disposal of municipal solid waste." USA Recycling, Inc. v. Town of Babylon, 66 F.3d 1272, 1276 n.1 (2d Cir. 1995). The landscape changed more directly when, in 1985, New York enacted Chapter 797 of the Solid Waste Management Act, which authorized the Town to exercise exclusive control over all solid waste within its jurisdiction. See 1985 N.Y. Laws 797. ¹

In the wake of this legislative change, the Town closed the landfills. It continued, however, to dispose of the Villages' waste, by sending it to sites off Long Island. Seeking a longer-term solution, the Town in 1985 negotiated an agreement with American Ref-Fuel Company of Hempstead ("Ref-Fuel"), under which Ref-Fuel would reconstruct and operate a resource recovery facility that could handle the waste from all the Villages. ² The Town of Hempstead Industrial Development Agency underwrote the project by issuing bonds.

In early 1986, the Town entered into a twenty-year inter-municipal agreement ("IMA") with each of the plaintiff Villages. ³ The IMA requires that each Village deliver all waste generated within its jurisdiction and collected by it or on its behalf to the Town, which, in return, is obliged to accept and dispose of all such waste. ⁴ The IMA also requires that the Villages pay various fees to help finance the cost of the Town's disposal services.

The IMA makes clear that the Town, in order to make the Ref-Fuel project economically feasible, sought a commitment from the Villages that they would use the Town exclusively to dispose of all of their garbage. ⁵ Presumably, without sufficient trash from which to recover energy, the facility would not survive financially. Similarly, the IMA indicates that the Villages sought a commitment from the Town that it would serve, on a long-term basis, as supplier of all their disposal services. ⁶

In September 1986, after all of the Villages had entered into IMAs, the Town, in the exercise of its authority to regulate local solid waste pursuant to Chapter 797, enacted a "flow control ordinance," Local Law No. 72-1986, which required, inter alia, "[a]ll municipalities wholly within the town [to] enter into or be subject to the provisions of [an intermunicipal agreement] or other appropriate arrangement approved by the town." Id. 52. ⁷

In November 1996, the Villages filed this 42 U.S.C. 1983 suit, seeking a judicial declaration that the flow control ordinance and the IMA were unconstitutional under the dormant Commerce Clause. The suit also included supplementary state law contract claims. The primary purpose of the suit, to allow the Villages to escape liability for disposal fees assessed by the Town pursuant to the IMA, is apparent from the complaint.

The Town conceded, and the district court agreed, that the ordinance was unconstitutional under C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383 (1994), which held that a similar flow control ordinance impermissibly discriminated against interstate commerce, see id. at 390. The court below upheld the IMA, however, holding that the Town entered into it as a market participant in the waste disposal market and that its contractual arrangements with the Villages were not barred by Carbone.

The Villages unsuccessfully moved for reconsideration and the district court on November 9, 1998 entered a final judgment (1) granting the Villages' cross-motion for summary judgment declaring the ordinance unconstitutional, (2) granting the Town's motion for summary judgment dismissing the challenge to the IMA, and (3) dismissing the Villages' supplemental state law claims and cause of action for fees under 42 U.S.C. 1988. The Villages appeal the grant of summary judgment with respect to the constitutionality of the IMA.

DISCUSSION

Although the Commerce Clause, taken literally, constitutes only a grant of power to Congress, permitting it to act affirmatively to regulate interstate commerce, see U.S. Const. art. I, 8, cl. 3 ("Congress shall have Power . . . [t]o regulate Commerce . . . among the several States"), the Supreme Court has long read the Clause also to prohibit the states, in the absence of specific congressional authorization, from regulating interstate commerce. See, e.g., Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 35 (1980); Hughes v. Oklahoma, 441 U.S. 322, 326 (1979). This prohibition on state action is said to arise implicitly from the "dormant" aspects of the Commerce Clause. See, e.g., Fulton Corp. v. Faulkner, 516 U.S. 325, 330-31 (1996).

Following this line of decisions, the Court in Carbone held invalid a flow control ordinance that "require[d] all solid waste to be processed at a designated transfer station before leaving the municipality." Carbone, 511 U.S. at 386. The ordinance was, the Court held, "just one more instance of local processing requirements that we long have held invalid." Id. at 391. Nowhere in Carbone, however, did the Court discuss the well-established "market participant" doctrine, under which a state could escape the restrictions of the dormant Commerce Clause so long as it accomplished the results it desired, not by regulation, but by participating in the market. See South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 93 (1984); White v. Massachusetts Council of Constr. Employers, Inc., 460 U.S. 204, 206-08 (1983); Reeves, Inc. v. Stake, 447 U.S. 429, 436-37 (1980); Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 810 (1976). According to commentators, this omission in Carbone "left the vitality and scope of the market participant [doctrine] in doubt." Richard J. Roddewig & Glenn C. Sechen, The Second Circuit Defines the Limits of Carbone, 28 Urb. Law. 847, 848 (1996).

Since Carbone, our court has entertained several dormant Commerce Clause challenges to arrangements, both contractual and legislative, through which local governments have sought to dispose of their trash. See Automated Salvage Transp., Inc. v. Wheelabrator Envtl. Sys., Inc., 155 F.3d 59 (2d Cir. 1998) (upholding contractual and legislative arrangements); Sal Tinnerello & Sons, Inc. v. Town of Stonington, 141 F.3d 46 (2d Cir. 1998) (same); USA Recycling, Inc. v. Town of Babylon, 66 F.3d 1272 (2d Cir. 1995) (same); SSC Corp. v. Town of Smithtown, 66 F.3d 502 (2d Cir. 1995) (upholding contractual but striking down legislative arrangement). Carbone notwithstanding, challenges to the contractual arrangements failed in all of these cases because the court found that the market participant exception applied. See Automated Salvage, 155 F.3d at 79; Tinnerello, 141 F.3d at 55-56; USA Recycling, 66 F.3d at 1291; SSC, 66 F.3d at 518; cf. Gary D. Peake Excavating Inc. v. Town Bd. of Hancock, 93 F.3d 68, 76 (2d Cir. 1996) (upholding a town ordinance prohibiting disposal of waste within the town except at a municipally operated transfer station or landfill).

On appeal, plaintiffs reiterate the argument they made to the district court: namely, that since the Town participates only in the waste disposal market, it cannot regulate the separate waste collection market. They contend that the IMA improperly governs the waste collection market by forcing the participants in that market to haul all waste to a designated facility, i.e., to use the Town's disposal services.

Plaintiffs' argument relies on South-Central Timber, in which the Supreme Court held invalid Alaska's...