U.S. v. City of New York
| Decision Date | 11 August 1992 |
| Docket Number | No. 1708,D,1708 |
| Citation | 972 F.2d 464 |
| Parties | 22 Envtl. L. Rep. 21,506 UNITED STATES of America, Plaintiff-Appellee, State of New York, Plaintiffs, v. CITY OF NEW YORK and New York City Department of Environmental Protection, Defendants. Carolyn MALONEY, Individually, and as member of the New York City Council, Petitioner-Appellant, Fernando Ferrer, Intervenor, v. CITY OF NEW YORK, New York City Department of Environmental Protection, Albert F. Appleton, Commissioner of the New York City Department of Environmental Protection, Chambers Services, Inc., New York Organic Fertilizer Company, Merco Joint Venture, and Renewable Earth Products of New York City, Respondents-Appellees. ocket 92-6074. |
| Court | U.S. Court of Appeals — Second Circuit |
S. Mac Gutman (Halima A. Gutman, Gutman & Gutman, Forest Hills, N.Y., of counsel) for petitioner-appellants.
O. Peter Sherwood, Corp. Counsel, New York City (Leonard Koerner, Lewis Finkelman, Helen P. Brown, of counsel), for Mun. appellees.
Alvin K. Hellerstein (Stroock & Stroock & Lavan, New York City, of counsel) for respondent-appellee New York Organic Fertilizer Co.
Paul A. Winick (Thelen, Marrin, Johnson & Bridges, New York City, of counsel) for respondent-appellee Chambers Services, Inc.
K. Richard Marcus (Vincent Torna, McDonough Marcus Cohen & Tretter, P.C., of counsel) for respondent-appellee Merco Joint Venture.
Deborah B. Zwany, Asst. U.S. Atty., E.D.N.Y. (Andrew J. Maloney, U.S. Atty., Robert L. Begleiter, Robin L. Greenwald, Asst. U.S. Attys., E.D.N.Y., Richard J. Weisberg, Asst. Regional Counsel, U.S. E.P.A., of counsel) for appellee U.S.
Before LUMBARD, VAN GRAAFEILAND and WALKER, Circuit Judges.
This case presents an intriguing question of first impression in this circuit and one not addressed below: do municipal taxpayers have standing to challenge the legality of municipal expenditures without establishing that a declaration that the expenditures are illegal will likely yield any savings to the taxpayer? Because controlling Supreme Court precedent grants a unique status to municipal taxpayer actions, we hold that municipal taxpayers do have standing to challenge municipal expenditures even where there is no likelihood that resulting savings will inure to the benefit of the taxpayer. Accordingly, we affirm the judgment of the district court, largely on the strength of the opinion below. We choose to write principally to address the standing question.
Of the nearly two billion gallons of wastewater produced in New York City (the City) every day, approximately 335,000 cubic feet (10,700 wet tons) is sludge. What to do with that staggering volume of waste is the underlying subject of this lawsuit.
From 1938 to 1986, the City dumped its sludge in the ocean, at a site just twelve miles offshore. Growing concerns about degradation of the marine environment and about sludge washing up on local beaches led Congress in 1977 to order municipalities to cease by December 31, 1981 all ocean dumping that "unreasonably degrade[s] the marine environment." 33 U.S.C. § 1412a.
The City, unable to develop an environmentally sound alternative, argued that its ocean dumping was reasonable because ocean dumping would produce fewer environmental harms than the available land-based options. This position prevailed in court, see City of New York v. EPA, 543 F.Supp. 1084 (S.D.N.Y.1981), and the City continued ocean dumping, though after 1986 at a site 106 miles offshore.
In 1988, Congress passed the Ocean Dumping Ban Act, 33 U.S.C. §§ 1412-16, outlawing all ocean dumping after December 31, 1991, and requiring municipalities either to stop dumping by August 14, 1989 or to enter into a consent decree with the Environmental Protection Agency (EPA) to create a plan to phase out all ocean dumping by the end of 1991.
On August 10, 1989, the City entered into a consent decree with the EPA establishing a schedule for the termination of ocean dumping. The decree, approved by the District Court for the Eastern District of New York, required the City to cease all ocean dumping by June 30, 1992. The decree also set forth a complex series of timetables to insure that the City would be able to meet this obligation.
First, the decree required the City to construct dewatering facilities capable of processing 20% of the City's sludge by the end of 1991 and 100% of the sludge by June 30, 1992. Second, the decree required the City to solicit proposals for land-based management of the sewage sludge, and established a schedule for evaluating those proposals. Third, the decree required the City to "have fully executed contracts ... for the interim land-based management of the City's sewage sludge by September 15, 1991." Finally, the decree ordered the City to develop a long term plan for sludge management.
Presented with these clear instructions, the City began the task of building dewatering plants, letting contracts to implement the interim land-based plan, and developing a long term strategy. This appeal focuses on the process by which the City let contracts for the interim land-based plan.
Because of the size and complexity of the problem, the City did not simply announce how much sludge it would need disposed of and open the floor for competitive bidding. Instead, the City pursued a thoughtful and comprehensive strategy designed to yield an environmentally sound land-based alternative to ocean dumping. The contracting process went forward as follows.
First, the City distributed requests for proposals (RFP), inviting interested companies to submit an outline of their planned sludge management plan. The City received thirty-nine proposals, and determined that twenty-four were sufficiently qualified to warrant further inquiry. The City then distributed a second stage RFP, requesting the twenty-four qualified proposers to present more detailed information.
Eleven of the twenty-four submitted proposals. In addition, one company not included in the original thirty-nine made a submission. After reviewing the twelve proposals, the City invited each company in for an interview, after which the company had thirty days to revise its proposal. The City received nine revised proposals and evaluated each according to stringent criteria laid out in the second stage RFP. After this technical evaluation, the City reviewed the sealed cost proposals of each of the companies. In the end, the City advised five of the proponents that the City would negotiate contracts with them.
After extensive negotiations, the City eventually came to terms with three organizations, Chambers Services, Inc. (Chambers), New York Organic Fertilizer Company (NYOFCO), and Merco Joint Venture (Merco). The City Comptroller registered the NYOFCO and Chambers contracts on September 13, 1991, and the Merco contract on September 18, 1991. With these contracts, the City complied with its obligation under the consent decree to arrange for an interim land-based sludge management system, and set the stage to begin reducing ocean dumping by 20% by December 31, 1991, and to end ocean dumping entirely by June 30, 1992.
On October 29, 1991, plaintiff Carolyn Maloney, a New York City taxpayer and member of the City Council (who faced an election in six days), brought an Article 78 proceeding in state court against the City, the Department of Environmental Protection (DEP), and DEP commissioner Albert Appleton, seeking to void the City's contracts with Merco, Chambers, and NYOFCO.
In order to prevail in an Article 78 proceeding, New York law requires the plaintiff to establish that a challenged administrative action "was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion." N.Y.C.P.L.R. § 7803(3). Maloney alleged that the contracts were unlawful because the City failed to submit the contracts for competitive bidding, as required by General Municipal Law (G.M.L.) § 103(1).
G.M.L. § 103(1) provides that:
Except as otherwise expressly provided by an act of the legislature or by a local law adopted prior to September first, nineteen hundred fifty-three, all contracts for public work involving an expenditure of more than twenty thousand dollars and all purchase contracts involving an expenditure of more than ten thousand dollars, shall be awarded ... to the lowest responsible bidder furnishing the requested security after advertisements for sealed bids in the manner provided in this section.
Although Maloney's claims sounded entirely in state law, and although there was no diversity of citizenship between the parties, the City immediately sought to remove the case to the United States District Court for the Eastern District of New York.
On November 27, 1991, Judge Mishler, the same judge who presided over the consent decree, removed the action to federal court pursuant to his power under the All Writs Act, 28 U.S.C. § 1651, to adjudicate state law actions that threaten the integrity of federal consent decrees. See Yonkers Racing Corp. v. City of Yonkers, 858 F.2d 855, 863-64 (2d Cir.1988), cert. denied, 489 U.S. 1077, 109 S.Ct. 1527, 103 L.Ed.2d 833 (1989); Ludlow Park Homeowners Ass'n v. County of Westchester, 741 F.Supp. 1126, 1129 (S.D.N.Y.1990), aff'd, 930 F.2d 909 (2d Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 61, 116 L.Ed.2d 37 (1991). The court also allowed the three contracting companies, Chambers, Merco, and NYOFCO to intervene on the side of the city defendants. Fernando Ferrer, the Bronx Borough President, intervened in support of Maloney.
Judge Mishler referred the case to Magistrate Judge Orenstein, and defendants moved for summary judgment. On December 27, 1991, Magistrate Judge Orenstein issued a thoughtful and comprehensive fifty-five page report recommending summary judgment for the defendants.
In that report, the Magistrate Judge described his task as ...
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