Local governments can require haulers to bring locally generated solid waste to designated disposal facilities without unlawfully interfering with interstate commerce, according to a ruling by a federal appeals court.
However, communities must select such facilities using a fair, open and competitive process that does not discriminate against out-of-state interests (Harvey & Harvey Inc. v. County of Chester, et al., No. 94-1924 and Tri-County Industries Inc. v. County of Mercer et al., No. 94-3622, 3d Cir., Oct. 20, 1995).
After a series of public hearings, the Chester County, Pa., Board of Commissioners adopted a solid waste management plan in 1990. The plan designated two in-county landfills as "primary disposal sites."
In 1991, state environmental authorities approved Chester's plan on condition that the county direct all its waste to these sites. The county enacted a flow control ordinance, dividing Chester into two service areas - each with its own disposal facility. In June 1994, barely a month after the landmark Carbone decision, Harvey & Harvey Inc., an interstate hauler and processor of municipal waste, filed suit in federal district court challenging Chester County's flow control plan as an infringement on interstate commerce.
Finding that the ordinance did not overtly discriminate against interstate commerce, the court announced that it would use a less sensitive legal test in evaluating the county's system. When Harvey failed to prove its case under this standard, the court ruled in favor of the county. Harvey appealed hoping a higher court would say that a stricter legal standard should apply.
Meanwhile, Tri-County Industries Inc., which owned a disposal facility in Mercer County, Pa., responded to a nationally advertised request for proposals from Mercer, which had decided to handle waste disposal by contracting a single facility. The winning bidder owned a landfill in nearby Butler County.
After the state approved the county's solid waste plan, which designated the Butler County site, Mercer County enacted an ordinance requiring haulers to bring all locally generated municipal waste to the selected landfill.
Tri-County ignored the ordinance, and began hauling Mercer County waste to cheaper facilities in Ohio. After the county threatened to revoke the company's waste hauling license, Tri-County filed suit in federal district court on the grounds that the flow control ordinance was unconstitutional. In October 1994, the district court ruled that the ordinance illegally burdened interstate commerce. The county appealed.
After consolidating the cases, the U.S. Court of Appeals for the Third Circuit overturned both district court rulings. It sent the cases back to the lower courts for rehearing under Carbone-sensitive legal standards, which the appeals court unveiled in its opinion.
Not every flow control scheme discriminates against interstate commerce, the court noted. Even if an ordinance requires all waste to be processed or deposited in-state, the situation "does not necessarily violate the Commerce Clause unless out-of-state businesses did not compete on an even playing field for the designation," said the court. The validity of flow control schemes depends on the designation process, the duration of the designation and the prospects for adding alternative (notably, out-of-state) sites, the court continued.
Local authorities can choose a single service provider without discriminating against interstate commerce, the court added, so long as the selection process is "open and competitive and offers truly equal opportunities to in-state and out-of-state businesses."
However, the Court of Appeals panel acknowledged that it was navigating uncharted waters. "[We] cannot cite any authority for the ... inquiry we will describe, ... and we ... draw upon notions of reasonableness to effectuate the relevant polices" the opinion said.
At one point, the appeals court provides hints to would-be plaintiffs (i.e., disappointed bidders) on how to prove that a flow control scheme illegally favors in-state interests. A few paragraphs later, the decision suggests ways for governmental defendants to rebut proof of discrimination.
The court expressed certain misgivings about Chester County's designation process, particularly the apparent bias in favor of selecting in-county sites. As for flow control in Mercer County, the court found no proof of discrimination in the designation process. Nevertheless, it remanded the case to the lower court "to gauge the real extent of the opportunity enjoyed by out-of-state providers to participate in the Mercer County waste disposal market."
Notably, not one out-of-state disposal firm formally complained about the process or, for that matter, even submitted a bid.