Contract Flow Control OK'd

A local government does not discriminate against interstate commerce or violate haulers' constitutional rights when it (a) contracts with a solid waste collector on an exclusive basis, and (b) enacts an ordinance to assure that all waste either is collected by the contractor or brought to a designated facility. [Houlton Citizens' Coalition, et. al. v. Town of Houlton, No. 98-1999, 1st Cir., April 26, 1999.]

After its landfill closed, the town of Houlton, Maine, invited proposals, conducted competitive bidding and selected a local hauler, Andino Inc., as its exclusive contractor. The town also enacted an ordinance requiring all locally generated residential solid waste to be taken to Andino's transfer station.

Another hauler, David Gordon, sued Andino and the town, convincing a federal district court to halt enforcement of the ordinance. So, the town enacted a new ordinance, which requires all residents either to use the town's designated waste collection contractor or to haul the trash themselves. Under its contract with the town, Andino may transport collected trash to any lawful disposal site. However, residents who self-haul must take their trash to a disposal site designated by the town council.

The town also amended its contract with Andino, granting the company the exclusive right to collect locally generated residential waste and designating its transfer station as the disposal site for self-haulers.

Gordon, two other local trash haulers, and a citizens' association challenged the later ordinance in federal district court. They argued that the measure unlawfully interfered with interstate commerce, amounted to an unconstitutional "taking" of property without just compensation, unlawfully impaired the haulers' ability to fulfill existing contracts, and, for good measure, violated the town charter. The district court refused to block implementation of the ordinance, and subsequently ruled in favor of the town on all four claims.

On appeal, the U.S. Court of Appeals for the First Circuit upheld the district court's decision, ruling that the Supreme Court's Carbone decision [511 U.S. 383 (1994)] does not require "a broad-based ban on every flow-control ordinance that happens to be coupled with an exclusive contractual arrangement in favor of an in-state operator." In short, no unconstitutional discrimination exists where in-state and out-of-state bidders can "compete for [a] contract on the same footing," the opinion said.

The appellate panel found that Andino "earned the Houlton contract through its successful completion of a well-advertised, fully competitive bidding process that was accessible to all who coveted the business."

Moreover, "Houlton passes the balancing test with flying colors," said the court, noting the "strong local interest in efficient and effective waste management, and the virtually invisible burden ... on interstate commerce."

The appeals court rejected the unconstitutional "taking" and contract impairment arguments, but directed the district court to allow the challengers to pursue their town charter violation claim in state court.