In mid-17th century Nieuw Amsterdam, a Dutch colonial settlement that later became New York City, no one was surprised or upset when civic officials decreed that “all … refuse be brought to dumping-grounds near the City Hall and the gallows and to other designated places” [M.W. Goodwin, Dutch and English on the Hudson 105 (1919)].
Some 350 years later, a majority of the U.S. Supreme Court all but sanctified the role of states and localities in waste management, writing that the disposal “of trash has been a traditional government activity for years” [United Haulers, 550 U.S. 330 (2007)]. Upholding county ordinances that required all locally generated solid waste to be transported to facilities owned by a county waste authority, the high court essentially announced a sweeping hands-off policy: Federal courts should not be deciding “what activities are appropriate for state and local government to undertake, and what activities must be the province of private market competition” [ibid].
Just in case anyone needed another reminder, local hegemony in waste management seems even more comfortably ensconced following a recent federal appeals court ruling in a lawsuit challenging a county's waste collection practices. The appellate judges almost instinctively referred to waste management as “a traditional area of state and municipal regulation.”
Three decades ago, the Florida legislature passed a law giving Hillsborough County, its franchisees and its licensees exclusive control over solid waste collection and disposal within the county. To implement this regulatory power, the county enacted ordinances creating a dual franchise system — residential and commercial. Residential customers served by franchised haulers pay rates set by the county commissioners. Franchisees and their commercial customers negotiate collection charges. The county awarded only three franchises for waste disposal services to commercial entities.
Danner Construction Co. and Gateway Roll-Off Services, a commercial customer and a hauler not awarded a franchise, respectively, filed suit in Tampa's federal district court to block the county system. The plaintiffs alleged that the ordinances harmed them by inflating the cost of commercial waste disposal services and barring service providers from competing in the market in violation of federal antitrust and state laws.
As a general rule, states and their political subdivisions are not subject to federal antitrust laws if the challenged activity is undertaken under a “clearly expressed state policy” sanctioning anticompetitive conduct [Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985)]. Addressing only the federal antitrust claims, the magistrate judge ruled that the county was not immune from liability because its franchise system facilitated anticompetitive practices by private parties. He ordered the county to answer the complaint, but instead the county chose to immediately appeal his decision.
A three-judge panel of the U.S. Court of Appeals for the 11th Circuit reversed the district court order. The plaintiffs' antitrust claims were dismissed, and the case will proceed, if at all, on the other claims.
“The authorizing state legislation contemplated, and most likely intended, the anticompetitive effects that resulted when the county passed the ordinance,” the opinion said. “The ordinance complies with the authorizing statute, which allows the county to take exclusive control of waste collection … pursuant to a clearly articulated anticompetitive policy of the state.”
[Danner Construction Co., Inc. v. Hillsborough County, Fla., No. 09-13951, 11th Cir., June 9, 2010].
Barry Shanoff is a Rockville, Md., attorney and general counsel of the Solid Waste Association of North America.
The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: [email protected].