Sweetheart(less) Deal

Appeals court OKs unequal treatment of waste firms.

A waste authority can sometimes play favorites with its customers without running afoul of the U.S. Constitution, according to a ruling by a federal appeals court. Van der Linde Housing Inc. (VdL), which collects waste from Virginia construction sites, uses the Zion Crossroads Transfer Station (Zion) in Albemarle County, Va., which is owned by Allied Waste Systems (AWS). Besides operating Zion, AWS competes directly with VdL and other haulers. All companies are free to transport their loads to any waste facility.

Rivanna Solid Waste Authority (RSWA) is authorized by law to set tipping fees on waste originating within its service area, which includes Charlottesville, Va., and Albemarle County. Under an agreement signed in 1997 with Zion's former owner, RSWA is responsible for collecting a two-part disposal charge for waste delivered to Zion: a $46-per-ton base disposal fee that RSWA remits to AWS and a $16-per-ton “service” fee that RSWA retains to offset its billing and operational costs. AWS pays no base fee as the sums would simply be remitted to the company.

Initially, haulers paid the base fee directly to AWS and nothing to RSWA, which was not involved in the billing process. In 2005, RSWA began billing haulers for their use of Zion, and, except for AWS, tacking on the service fee. Trying to stay competitive, VdL declined to pass the service fee through to its customers.

VdL filed suit against RSWA in federal district court, alleging that the AWS-RSWA agreement denies VdL equal protection of the laws in violation of the 14th Amendment of the U.S. Constitution. The suit did not challenge AWS's exemption from the $46 base fee, but argued that all haulers, including AWS, should pay the service fee.

VdL claimed losses totaling nearly $32,000 plus unspecified lost profits from AWS luring VdL customers with savings of $16 per ton on waste disposal.

The district court dismissed the suit, and the ruling was upheld by the U.S. Court of Appeals for the Fourth Circuit, which found that the claim had no legal merit.

The Equal Protection Clause of the 14th Amendment restricts legislative action creating arbitrary differentiations and classifications. But, the appeals court noted, “the vast majority of government actions — especially in matters of local economics and social welfare where state governments exercise a plenary police power — enjoys a ‘strong presumption of validity’ and must be sustained against a constitutional challenge [where it] bears a rational relation to some legitimate end.”

“[I]t is hard to conceive of a classification much more rational than the one at issue here … [placing] the financial burden upon entities … that utilize the public services provided … while exempting … AWS that [RSWA] relies upon to ensure public access to those services,” the opinion continued.

Finally, the appeals court brushed aside VdL's argument that AWS could end up monopolizing the waste collection market, directing the company to “engage the political process” or file a claim under state law.

[Van der Linde Housing, Inc. v. Rivanna Solid Waste Authority, No. 06-1654, 4th Cir., Nov. 7, 2007. ]

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: shanoff@knopf-brown.com.

The columnist is a Rockville, Md., attorney and serves as general counsel of the Solid Waste Association of North America.

TAGS: Legal