Flat-Out Flagrant

MUNICIPAL WASTE TRANSPORT permit and licensing fees unduly burden interstate commerce if they are not apportioned based on the hauler's local activity, according to a ruling by a Texas appeals court.

To prevent “unauthorized waste releases” and to deter the “discharge of waste into storm sewers, street rights-of-way and other unauthorized places,” the city of Houston passed a series of ordinances to regulate the transportation of certain nonhazardous wastes. The measures make it unlawful to transport waste originating within the city unless the transporter holds a “current and valid transporter permit,” and the driver and vehicle must be “designated” on the permit.

A transporter is defined as someone “who accepts waste that originates from a location within the city and who uses public rights-of-way for transportation.” Under the permit system, a transporter pays a $50 permit fee and $400 for each vehicle requiring a registration decal.

A municipal court judge convicted Craig Shannon of failing to obtain a transporter permit and operating a waste transport vehicle without proper designation, and assessed a $250 fine on each charge. Shannon appealed to the Harris County Criminal Court, which upheld the convictions. Undaunted, Shannon's lawyer asked a state appeals court to review his convictions.

His lawyer contended that the city's permit and registration fees are unconstitutional under the Commerce Clause. Relying on American Trucking Associations v. Scheiner, 483 U.S. 266 (1987), the lawyer asserted that the permit and licensing fees created by the ordinances are prohibited “flat taxes” that unduly burden interstate commerce. The Scheiner case involved a Pennsylvania permit fee and axle tax that applied to all motor carriers, whether registered in Pennsylvania or elsewhere. The U.S. Supreme Court invalidated the so-called “flat” or unapportioned taxes. “If each state imposed flat taxes for the privilege of making commercial entrances into its territory, there is no conceivable doubt that commerce among the states would be deterred,” the opinion stated. The high court noted that the flat taxes “discriminate against out-of-state vehicles by subjecting them to a much higher charge per mile traveled in the State, and they do not purport to approximate fairly the cost or value of the use of Pennsylvania roads.”

Reversing Shannon's convictions and acquitting him of the charges, the state appeals court found the Scheiner fee structure similar to what Houston had imposed. “[T]he city's flat tax charges the interstate transporter the same fee that it charges the intrastate transporter,” the court noted. “Although this is a facially nondiscriminatory tax, the [nonlocal] transporter who makes just one entry a year into Houston to load waste must pay the same fee as a local hauler who loads waste in Houston on a daily basis.” Moreover, “if … each municipality were to charge transporters an annual flat fee for the privilege of loading waste in its city, transporters would be encouraged to conduct only local transport of waste, rather than attempt to pay the multiple registration fees necessary to conduct their business on an interstate basis,” the court added.

[Shannon v. State, 2004 WL 63925, Tex. App. Dist. 1, Jan. 15, 2004]

The columnist is a Rockville, Md., attorney and serves as 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].