Feeling the Flow 8772

Lawyers for SWANA and NSWMA discuss the effects of the historic Oneida-Herkimer flow control decision — and its lingering issues.

May 1, 2009

11 Min Read
Feeling the Flow

This spring marks the two-year anniversary of the U.S. Supreme Court's historic United Haulers vs. Oneida-Herkimer decision. In that ruling, which upheld flow control ordinances in the New York counties of Oneida and Herkimer, the high court told local governments that they can, without discriminating against interstate commerce, pass laws directing waste to their facilities.

In its 1994 Carbone decision, the Supreme Court struck down Clarkstown, N.Y.'s flow control law — which required all trash collected in the town to be brought to a transfer station that was owned at the time by a private firm — because it concluded the law discriminated against interstate commerce. However, in Oneida-Herkimer, the justices determined the ordinances in question do not discriminate against interstate commerce because the facilities to which haulers have to bring their waste are publicly owned. Therefore, the laws equally affect all in- and out-of-state private businesses, whereas the Clarkstown ordinance favored the firm that owned the transfer station, the high court said.

Predictably, the public and private waste sectors and their representatives had very different reactions to the decision, with the public sector applauding the ruling and the private sector decrying it. Now that there's been time for the dust to settle on the ruling, Waste Age thought it was a good time to check in with David Biderman, general counsel for the Washington-based National Solid Wastes Management Association, which represents private haulers, and Barry Shanoff, general counsel for the Silver Spring, Md.-based Solid Waste Association of North America, which consists primarily of public sector members.

Biderman and Shanoff answered our questions on the current state of flow control via e-mail.

(Note: Although Shanoff serves as general counsel for the Solid Waste Association of North America, his statements and opinions expressed herein are his own.)

Waste Age (WA): It's been two years since the U.S. Supreme Court's historic ruling in the Oneida-Herkimer case. What kind of impact has the ruling had so far?

Biderman: Some local governments are pursuing flow control. Many of these governments had flow control before the Carbone decision. On a national basis, the impact has been limited, but in certain towns and counties, the impact on a local hauler or private disposal facility has been significant.

Shanoff: Some observers were predicting an avalanche of flow control initiatives by local governments. Turns out, relatively few jurisdictions — most of them in the Northeast — are seizing on the ruling to aggressively implement their solid waste plans.

Local officials in New York state have been relatively assertive on flow control authority. For example, in May 2008, Rockland County enacted Local Law No. 2, which requires all waste and recyclables generated within the county to be transported to a “designated facility.” The law defines a “designated facility” as “any publicly owned solid waste facility(ies) and/or any solid waste facility(ies) owned or operated by the [Rockland County Solid Waste Management Authority], and designated by the authority for acceptance or disposal of yard waste, solid waste, construction and demolition debris, scrap metals, and/or recyclables, including but not limited to transfer stations, materials recovery facilities, drop off centers, and resource recovery facilities.” The authority owns the designated facilities, but operates them using private contractors.

A few months later, a group of waste generators, haulers and waste processors filed suit in federal district court against the county and the authority, their respective top officers, and the Town of Clarkstown. [C&A Carbone, Inc., et al. v. County of Rockland, No. 08 Civ. 6459, S.D.N.Y.] Also named as a defendant is the Clarkstown Recycling Center, a currently designated facility that was prominent in C&A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383 (1994), in which the U.S. Supreme Court held that an ordinance forcing haulers to deliver waste to a particular private facility discriminated against interstate commerce. At deadline, the district judge had not yet set a date for the parties to meet on issues relating to discovery.

In Pennsylvania, the National Solid Wastes Management Association and its state affiliate filed suit in federal district court against Delaware County, which enacted flow control to its publicly owned waste transfer stations. The facilities are operated by private companies paid with public funds.

The lawsuit challenges the flow control measure on two grounds: because the county-owned facilities are not operated by the county and because the county failed to adopt flow control in accord with state requirements. Faced with challenges based on both U.S. constitutional law and state law, the judge will likely resolve the dispute by deciding the state law issue rather than reaching for the federal issue. Indeed, the state environmental agency has sided with the plaintiffs on their contention that the county failed to meet state law requirements when it amended its solid waste plan.

What's harder to gauge, however, is the extent to which local governments are taking advantage of their increased bargaining power by virtue of the decision. Take the case of a put-or-pay contract negotiation between a county seeking a reliable volume of business at its facility and local haulers seeking a price break and some flexibility. If the county tries to play fair with the haulers, but the haulers still balk at the terms the county offers, local officials can simply flow control all in-county generated waste to the landfill, leaving the haulers with no choice and no options.

WA: At the flow control presentation you two made at WASTECON last fall, there was some discussion about whether the Oneida-Herkimer ruling permits flow control to facilities that are publicly owned but privately operated. Explain your position on that issue.

Biderman: The U.S. Supreme Court's Oneida-Herkimer decision expressly states that it applies only to disposal facilities owned AND operated by a local government. I think the Supreme Court majority meant what it said, and efforts by some local governments to read into the decision a “gray area” for government-owned, privately-operated facilities is misguided and contrary to the dormant Commerce Clause.

Shanoff: Flow control to publicly owned but privately operated facilities does not run afoul of either Carbone or United Haulers. The United Haulers decision was a strong, pro-local government ruling. Among other pronouncements, the majority cautioned federal courts throughout the country to defer to local decisions about public versus private involvement in traditionally local government functions.

The policy considerations expressed by the majority apply with equal force to a situation where a locality owns a waste handling facility and decides to reassign its public works employees elsewhere in the community. If the local government chooses instead to pay an outside contractor whose services presumably are procured through open and competitive bidding, where's the discrimination? By its nature, competitive procurement is exclusionary in the sense that some vendors or service providers win, while the rest lose. That's not the kind of activity courts will deem discrimination under the Commerce Clause.

WA: As the case law stands now, when does flow control violate the Commerce Clause of the U.S. Constitution?

Biderman: Flow control violates the Commerce Clause when it discriminates against interstate commerce. This occurs when the favored facility is privately owned or privately operated. Flow control may violate the Commerce Clause, even when a publicly owned disposal facility is involved, if the burden on interstate commerce substantially outweighs the benefits to the local government.

Shanoff: Flow control can discriminate against interstate commerce by favoring local interests at the expense of out-of-state interests, but the outcome could vary considerably depending on the circumstances. Nondiscriminatory flow control measures can also violate the Commerce Clause of the U.S. Constitution if the local benefits of facility designation are outweighed by the impact on interstate commerce. Whenever local governments have successfully defended their flow control measures against claims that they discriminate against interstate commerce, far more often than not they also have prevailed on the balance between local interests and interstate impacts.

WA: David, what is the private sector's position on flow control? And Barry, what is the public sector's position?

Biderman: NSWMA opposes flow control. EPA has concluded flow control does not provide additional health or environmental benefits, and does not increase recycling. Flow control provides a monopoly for trash disposal and creates a hidden tax that makes waste collection more expensive for haulers and their customers. It can disrupt a community's budget by diverting waste away from a landfill from which the community receives financial benefits, and can interfere with the reliable production of landfill gas at some locations.

Shanoff: Physicists tell us that the fundamental forces between particles or objects cannot be explained by a single theory or framework. Similarly, how local governments view or approach flow control is neither constant nor unified nor predictable. Attitudes vary considerably from place to place, from year to year, and, for the cynical, from election cycle to election cycle.

With a largely public sector membership, the Solid Waste Association of North America (SWANA) recognizes flow control as an effective and legitimate instrument of integrated municipal solid waste management. The association supports environmentally sound, economically responsible (and, I would infer, fiscally responsible) decision making by local officials on all matters affecting solid waste management, but has never taken the position that flow control is necessarily the best choice in each and every locale.

WA: On a related note, what effects does flow control have on a community?

Biderman: Flow control's most direct impact on a community is that it increases the waste collection costs for residents and businesses. During these challenging economic times, local governments should not be increasing waste disposal costs unnecessarily. Flow control also creates the illusion that the desired amount of waste will always be available. Many flow control facilities are struggling because the amount of garbage has declined during this recession.

Shanoff: Flow control can have a dramatic effect on a community. For that reason, SWANA has urged local governments and waste authorities who are contemplating flow control to carefully consider the potential economic, environmental and social impacts from flow control by inviting comments from residents, businesses and other interested parties. Open meetings and public discussion can substantially contribute to responsible and responsive implementation of flow control.

WA: What alternatives to flow control do local governments use to manage the waste generated within their communities?

Biderman: Thousands of communities in the United States receive environmentally protective and cost-effective waste removal and recycling services without using flow control. This is done through regulatory oversight combined with the discipline of the free market.

Shanoff: After the Carbone decision in 1994, local governments began using contracts, franchising, and pricing to steer waste to preferred facilities. For the most part, the courts upheld these mechanisms as valid, nondiscriminatory measures to manage solid waste. Even in the wake of United Haulers, many local officials shun overt flow control in favor of such practices.

WA: Are there any unresolved legal issues surrounding flow control that you expect appeals courts or perhaps the U.S. Supreme Court to address in the future?

Biderman: I expect it to be awhile before the Supreme Court addresses flow control again. I hope that the appeals courts will address the publicly owned, privately operated issue to eliminate uncertainty. None of the post-Oneida-Herkimer cases have specifically addressed the issue, although a Supreme Court decision last year involving tax-exempt bonds confirmed NSWMA's interpretation of the Oneida-Herkimer decision.

Shanoff: What is “unresolved” depends on one's point of view. As I said earlier, I think United Haulers covers a situation where a jurisdiction enacts flow control to a publicly owned facility that is managed by a private contractor paid with public funds. Private haulers can and do express their disagreement by filing lawsuits against the local governments or waste authorities. From their perspective, the public/private scenario was not addressed by the Supreme Court.

Let's go a step further: Flow control to a privately owned and privately operated facility. Sounds like Carbone, right? And we know United Haulers did not overrule Carbone. Still, a case could be made on behalf of a government entity that private facility designation simply carries out the locality's responsibilities as set out in its solid waste plan.

If the local government provides an opportunity for all facility owners - — in-state and out-of-state - — to compete for the designation, showing no favoritism to local business, then where's the discrimination? With adequate background work and preparation, as well as adherence to state law in the development of its waste plan or policy, a local government can make a defensible case for flow control to a private facility.

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