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LARSEN BAKING CO. v. CITY NEW YORK (07/22/68)

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT 1968.NY.42725 <http://www.versuslaw.com>; 292 N.Y.S.2d 145; 30 A.D.2d 400 July 22, 1968 LARSEN BAKING CO., INC., ET AL., RESPONDENTS,v.CITY OF NEW YORK, APPELLANT Appeal from a judgment of the Supreme Court in favor of plaintiffs, entered January 11, 1967 in Kings County, upon a decision of the court on a trial at Special Term (Nicholas M. Pette, J.), in an action for a declaratory judgment. J. Lee Rankin, Corporation Counsel (Stanley Buchsbaum and Donald E. Biederman of counsel), for appellant. Scribner & Miller (Herbert Plaut of counsel), for respondents. Christ, J. Beldock, P. J., Brennan, Hopkins and Martuscello, JJ., concur. Author: Christ


Appeal from a judgment of the Supreme Court in favor of plaintiffs, entered January 11, 1967 in Kings County, upon a decision of the court on a trial at Special Term (Nicholas M. Pette, J.), in an action for a declaratory judgment.

Christ, J. Beldock, P. J., Brennan, Hopkins and Martuscello, JJ., concur.

Author: Christ

 The principal issue on this appeal is whether, in computing the amount of an industrial user's sewer surcharge, its excess pollutant concentration must be tested individually, or whether it may be calculated on the basis of an average for the industry obtained by testing a number of plants constituting a representative cross section of the industry.

Section 687-1.0 of the Administrative Code of the City of New York (Local Laws, 1961, No. 2 of City of New York, § 1, eff. March 1, 1961 [§ 12]) was designed to combat pollution by requiring industries that contribute thereto to help pay the cost of treating it. It provides that sewage or industrial wastes containing pollutants in excess of permissible levels may not be discharged into the sewer system except with the permission of the Commissioner of Public Works of the city and according to rules and regulations to be adopted by him. Among other things, it is provided that firms may be required to install such equipment as is necessary to allow accurate gauging and sampling of their wastes, at their own expense. The surcharge is to be based upon a formula in which, essentially, the average concentration of excess pollutants in a user's sewage is multiplied by the estimated volume thereof; and the product of these two factors is in turn multiplied by the unit cost of treatment in the city's sewage treatment plants. Any excess over the stated allowable concentration is to be surcharged.

The sewer rent is based upon the water supply to a given property "except as otherwise provided" (Administrative Code, § 683a4-9.0, subd. b). Where the use to which a property is devoted is such that the water supplied cannot be entirely discharged into the sewer system, the Commissioner of Water Supply, Gas and Electricity of the city is entitled to make a reasonable estimate of the volume discharged (Administrative Code, § 683a4-9.0, subd. b, par. 5). On September 1, 1959 he determined that the average retention of water by bakeries is 40%; and thereafter a firm could reduce by that much its sewer rent and surcharge, by simply applying for the reduction and showing that it was a bakery.

When the Bureau of Water Pollution Control in the Department of Public Works (the "Bureau") entered upon its duty of administering said local law, it found that it could not be done on a strict plant-by-plant basis due to the sheer magnitude of the task. Since individual samplings of each of the firms in even some of the 22 classified industries would have taken 10 to 20 years, the bureau decided to determine average pollutant concentrations for each industry based upon a representative cross section of the industry, in accordance with a schedule of priorities beginning with those apt to be the heaviest polluters (wholesale manufacturers), to be followed by those less likely to be surchargeable (retailers). For this reason, and because it was not known in advance whether a given plant or industry would produce excess pollutants, the Commissioner of Public Works determined not to exercise his power under the local law to require firms to modify their plumbing, so as to make themselves amenable to sampling, before he had a better idea of who would be surchargeable.

Soon after this Local Law No. 2 went into effect, and prior to the establishment of industry averages, the Commissioner invited all firms considered potentially surchargeable, including the plaintiffs, to have their own tests made and to submit the results, which would be accepted without question pending further sampling. Neither plaintiff elected to do so. The industry-average principle, which is not uncommon in the sewage control field and which was indorsed by the expert witnesses at the trial, was embodied in the Rules and Regulations promulgated by the Commissioner on September 30, 1963. Subdivision (d) of section 9.4 provides that an appropriate industry average may be applied to a plant where sampling is impractical for physical, economic or other reasons. However, section 9.5 gives the plant the option of undergoing an individual sampling at its own expense if it prefers not to accept the average.

The wholesale bakery investigation began early in 1961 and continued until 1965. A list of wholesale bakers was compiled, consisting of all those firms licensed as such by the Department of Health of the city, supplemented by various manufacturers' directories. Each one was visited. Of the 300 or so firms found to do any wholesale baking, only about 50 produced sweetgoods, the ingredients of which are extremely high in pollutants, the remainder being bakers of bread, who produce little waste. Of the 50, only 17, among them the plaintiffs herein, produced a general range of sweetgoods. Seven of the 17 -- not including the plaintiffs -- were amenable to sampling without plumbing modifications and were found to represent a cross section of the industry in terms of products and housekeeping methods and in terms of large, medium and small volumes of water consumption. The seven were sampled in 1963 and 1964 during periods selected by themselves as characteristic of their operations. There was information indicating that the respective rates of waste concentration of the highest and of the lowest might have been influenced by certain unusual factors. Rejecting these extremes, in accordance with accepted scientific practice, the combined average, after deducting the allowable rate of pollutants (650 p.p.m., i.e., parts per million), yielded the figure 4,625 p.p.m. excess pollutant concentration, the industrial average for surcharging the sweetgoods baking wholesalers. If the extremes had not been discarded, the average would have been substantially higher.

In December, 1964, the plaintiffs and the other 41 wholesale sweetgoods bakers who had not been sampled were offered the alternatives of accepting the industry average or of undergoing individual sampling. If a plant were to choose the latter, it would have to make whatever installation was necessary for the purpose and the city would bear the cost of the testing and sampling procedures. It was estimated that such installation would have cost plaintiff Ebinger $4,000 and plaintiff Larsen $1,000. The plaintiffs did not exercise the option thus offered them. Thereafter, early in 1965, the plaintiffs received bills from the City Collector for "sewer surcharge" for the four-year period commencing March 1, 1961, the effective date of Local Law No. 2 of 1961, computed on the basis of the average for the industry. Larsen's totaled about $36,000 and increased to about $41,096 by the time of trial; Ebinger's amounted to about $17,000, which increased to about $51,982 by trial time. Since Larsen had not applied for the 40% discount on volume for "in-product retention" of water allowed to commercial bakeries, and Ebinger had neglected to do so with respect to one of its three meters, these bills did not reflect any such allowance.

The plaintiffs protested to the Commissioner of Public Works concerning the use of the industrial average and the failure to allow the 40% discount on volume in the computations. After hearings, he rejected the protests. Thereafter, these consolidated actions were brought for declaratory judgments that Local Law No. 2 of 1961 and the Rules and Regulations of the Department of Public Works, insofar as they pertain to sewer surcharges, as applied, are illegal, and for incidental relief. We have concluded that, in finding for the plaintiffs after trial, the learned Special Term erred.

Preliminarily, it may be observed that legislation relating to the establishment and maintenance of sewers falls within the scope of the police power (Matter of Jordan v. Smith, 137 Misc. 341, affd. 254 N. Y. 585; Hutchinson v. City of Valdosta, 227 U.S. 303) and that the unconstitutionality of police power legislation must be demonstrated beyond any reasonable doubt (Wiggins v. Town of Somers, 4 N.Y.2d 215, 218).

The Commissioner is empowered by the law in question to require the installation, by the regulated party and at its own expense, of equipment necessary for continuous or intermittent measurement. Those subject to regulation may be required to bear reasonable costs of regulatory investigation (United States v. Darby, 312 U.S. 100; Bronx Gas & Elec. Co. v. Maltbie, 268 N. Y. 278, 288). To invalidate such a law, the regulated party must prove that the cost is so great as to be unreasonable (New Orleans Public Serv. v. New Orleans, 281 U.S. 682, 687; Matter of Fox Meadow Estates v. Culley, 233 App. Div. 250, 251, affd. 261 N. Y. 506). The plaintiffs offered no evidence to show that, in the light of all the relevant circumstances, the nonrecurring costs of the required sampling chambers (Ebinger -- $4,000; Larsen -- $1,000) were so great as to be unreasonable.

The execution of the local law in question was by its terms largely entrusted to the discretion of the Commissioner; and he was empowered, in subdivision e thereof, to make rules and regulations

"(b) regulating, restricting or prohibiting the discharge into the sewer system of any material or substance which is or may be detrimental or destructive to the sewer ...


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