WASHINGTON - The Supreme Court agreed yesterday to review the constitutionality of a New York town's law requiring the disposal of all trash at a designated facility, an action that ultimately could knock the underpinnings out from under municipal revenue bonds issued for solid waste facilities.
The case, C&A, Carbone Inc. v. Clarkstown, N.Y., will be considered during the court's 1993-94 term, which begins on Oct. 4 of this year.
The disputed Clarkstown law requires that all trash picked up in or brought into the city be disposed at the town's solid-waste facility. Such laws, known generically as flow-control ordinances, are designed to ensure a steady supply of waste for landfills, recycling centers, and waste-to-energy plants by eliminating competition.
Flow-control laws are particularly popular among municipalities that have a financial stake in the solid-waste facilities, especially when they have issued revenue bonds for construction.
If the Clarkstown law is deemed unconstitutional by the court, municipal revenue bonds issued elsewhere for some solid-waste facilities could be harmed. For example, Standard & Poor's Corp. notes in its Municipal Finance Criteria that because of the "competitive nature of the solid-waste industry, a system which cannot effectively retain the waste flow is generally not investment grade." Municipal Finance Criteria explains the factors Standard & Poor's considers when rating a bond issue.
C&A Carbone, a trash broker, is challenging the Clarkstown law as a violation of the U.S. Constitution's commerce clause. The clause prohibits states from erecting barriers to the free flow of goods and services across state lines.
As recently as last year, the Supreme Court has held that trash is entitled to protection under the commerce clause. Ruling in two separate cases last term, the justices said municipalities cannot prohibit or discriminate against the import of trash originating out-of-state unless they can show they have legitimate local concerns that cannot be met by nondiscriminatory means.
In those cases, however, the justices did not analyze the constitutional implications of laws restricting the export of trash to other states, the issue presented by the Clarkstown case.
C&A Carbone had been in the business of taking trash from customers in New York and New Jersey. The company then separated the trash into recyclable and nonrecyclable parts at its Clarkstown base of operations. It would ship recyclable materials to appropriate facilities and nonrecyclable parts to landfills or waste-to-energy plants.
Under the Clarkstown law, C&A Carbone was allowed to continue processing recycables for shipment to out-of-town facilities, but was prohibited from sending nonrecyclable trash to any facilities other than the town's designated trash facility.
The facility is operated by a private contractor under an agreement with Clarkstown. The facility charges a fee of $81 per ton to handle trash, compared with the $70 per ton C&A Carbone had charged. The facility operator is guaranteed under its agreement with the town to receive 120,000 tons of trash annually. In return, Clarkstown has the right to buy the facility in five years for $1.
If the guaranteed level of trash does not materialize, Clarkstown is required under its agreement to make up the difference in lost revenue. C&A Carbone claims in its legal brief that the Clarkstown law was enacted "to reduce the possibility that the town would have to pay under the guarantee."
A federal district court issued a preliminary injunction against enforcement of the law in March 1991, but the injunction was dissolved after the Supreme Court of Rockland County, a state trial court, issued a ruling that held the law to be constitutional.
The Appellate Division affirmed the trial court's ruling on Aug. 31, 1992, and on Oct. 27, 1992, the New York Court of Appeals, the state's highest court, declined to review the matter.
In other action yesterday, the justices declined to review a California Supreme Court ruling that limited the scope of a class-action lawsuit for refunds. The suit was spearheaded by a man who successfully argued he had been subject to discriminatory vehicle license fees.
The dispute sprang from the state's practice of charging higher vehicle license fees on cars purchased outside the state. Patrick G. Woosley paid the fees and then filed for a refund on behalf of himself and all others who had to pay the higher fees.
The state trial and appeals courts both ordered refunds to all California taxpayers who had paid the fees.
But the California Supreme Court in late 1992 ruled that only those individuals who had filed refund claims could be members of the class-action suit.