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SSC Corp. v. Smithtown, Town of

Citation: 25 ELR 21513
No. No. 94-9192, 66 F.3d 502/41 ERC 1241/(2d Cir., 09/19/1995)

The court holds that a municipal ordinance requiring all garbage generated in a New York town to be disposed of at a particular local incinerator violates the Commerce Clause of the U.S. Constitution. The town's flow-control ordinance, which was meant to ensure a steady flow of garbage and tipping fees to a town-financed incinerator, imposed criminal penalties on violators. The court first holds that the ordinance is a regulation and not merely "participation" by the town in the local waste disposal market. The ordinance grants the town the right to use its regulatory power to control the actions of others in the market by establishing criminal penalties that effectively compel parties to buy services at the incinerator. The ordinance therefore does not fall within the "market participation" exception to the Commerce Clause scrutiny. The court holds that the ordinance violates the dormant Commerce Clause. C & A Carbone, Inc. v. Town of Clarkstown, 24 ELR 20815 (U.S. 1994), requires that the court find that the town's flow-control ordinance facially discriminates against interstate commerce because it directs all town waste to a single local disposal facility, to the exclusion of both in-state and out-of-state competitors. The town had other nondiscriminatory means to achieve its goal of ensuring the financial viability of the incinerator and associated transfer station. The court next holds that a municipal contract requiring a particular waste hauler to dispose of the town's garbage at the incinerator constitutes municipal participation in both the waste collection and disposal markets and, thus, does not violate the Commerce Clause. The court holds that the town is a buyer rather than a regulator of collection and disposal services and, therefore, is a mere market participant in waste collection and waste disposal. It is not significant that the town is not performing the waste collection and disposal services itself. The town is receiving services for work that it decided to contract out rather than to perform itself. Because the waste disposal services are substantially if informally being provided to the town, the town can decide with whom it will deal. And even though the collector pays tipping fees to use the incinerator, the itemization of disposal and collection charges on the collector's bid for the contract reinforces the conclusion that the town is a buyer of disposal services. The contract bid indicates that the disposal costs are passed through to town residents and that the town is the one consuming and ultimately paying for those disposal services. Finally, the court notes that the town's vulnerability to liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and consequent need to contractually designate where its waste should be disposed of in order to stave off future CERCLA liability reinforces the fact that it has an identifiable interest in the disposal of its garbage.

Counsel for Plaintiff
David L. Snyder
Snyder & Snyder
Six Avery Ct., White Plains NY 10604
(914) 948-9700

Counsel for Defendants
Michael J. Cahill
Sinnreich, Wasserman, Grubin & Cahill
Crossroads Corporate Ctr.
1393 Veterans Memorial Hwy., Ste. 216 N., Hauppauge NY 11788
(516) 360-2300

Before Newman, Van Graafeiland and Cabranes, JJ.