Supreme Court Defines Flow Control Public Sector Exception

Apr 30: The U.S. Supreme court has issued its opinion in the solid waste "flow control" case of United Haulers Assoc., Inc. v. Oneida-Herkimer Solid Waste Management Authority (Case No. 05-1345) [See WIMS 1/9/07]. The opinion, which must be characterized as a loss for the private solid waste management sector, is sure to precipitate new rounds of litigation on the highly controversial issue of local regulations which direct or control the "flow" of municipal solid waste to specifically designated facilities. The High Court has now ruled that there is a "public" versus "private" distinction when it comes to directing solid waste to designated facilities.

The Justices were divided in their opinions along non-traditional lines. Justice Roberts delivered the opinion of the Court, except as to Part II–D. Justices Souter, Ginsburg and Breyer joined that opinion in full. Justice Scalia filed an opinion concurring as to Parts I and II–A through II–C. Justice Thomas filed an opinion concurring in the judgment. Judge Alito filed a dissenting opinion, in which Justices Stevens and Kennedy joined.

For over a decade the matter local flow control ordinances has been somewhat legally settled with the 1994 U.S. Supreme Court decision issued in C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 386 (1994) which deemed local flow control regulations invalid. However, over the last several years the concept of a possible "Public Sector Exception" to the Carbone ruling has been evolving in the lower courts. In the United Haulers case which was appealed from the U.S. Court of Appeals, Second Circuit, February 16, 2006, decision (Case No. 05-2024) the Appeals Court said, "In our view, then, the local benefits of the flow control measures substantially outweigh whatever modest differential burden they may place on interstate commerce." Contrarily, the U.S. Court of Appeals, Sixth Circuit, in the case of National Solid Wastes v. Daviess County KY (Case No. 04-6498), ruled in a similar case saying that a proposed county ordinance was unconstitutional, and said, it refused to adopt what it termed, "the public-private distinction with respect to the dormant commerce clause;" as provided in the United Haulers case.

In the opening paragraph of its opinion the High Court focuses on the public versus private distinction saying, “'Flow control' ordinances require trash haulers to deliver solid waste to a particular waste processing facility. In C & A Carbone, Inc. v. Clarkstown, 511 U. S. 383 (1994), this Court struck down under the Commerce Clause a flow control ordinance that forced haulers to deliver waste to a particular private [emphasis contained in original] processing facility. In this case, we face flow control ordinances quite similar to the one invalidated in Carbone. The only salient difference is that the laws at issue here require haulers to bring waste to facilities owned and operated by a state-created public benefit corporation. We find this difference constitutionally significant."

The High Court continues to define the new exception saying, "Disposing of trash has been a traditional government activity for years, and laws that favor the government in such areas -- but treat every private business, whether in-state or out-of-state, exactly the same -- do not discriminate against interstate commerce for purposes of the Commerce Clause. Applying the Commerce Clause test reserved for regulations that do not discriminate against interstate commerce, we uphold these ordinances because any incidental burden they may have on interstate commerce does not outweigh the benefits they confer on the citizens of Oneida and Herkimer Counties."

Further explaining its decision, the Supreme Court says that in the Carbone decision the majority of Justices did not comment on the "public-private distinction." However, they say, "The parties in this case draw opposite inferences from the majority’s silence. The haulers say it proves that the majority agreed with the dissent’s characterization of the facility, but thought there was no difference under the dormant Commerce Clause between laws favoring private entities and those favoring public ones. The Counties disagree, arguing that the majority studiously avoided the issue because the facility in Carbone was private, and therefore the question whether public [emphasis included in original] facilities may be favored was not properly before the Court.

"We believe the latter interpretation of Carbone is correct. As the Second Circuit explained, “in Carbone the Justices were divided over the fact of whether the favored facility was public or private, rather than on the import of that distinction.” 261 F. 3d, at 259 (emphasis in original). The Carbone dissent offered a number of reasons why public entities should be treated differently from private ones under the dormant Commerce Clause. See 511 U. S., at 419–422 [opinion of Justice Souter]. It is hard to suppose that the Carbone majority definitively rejected these arguments without explaining why. The Carbone majority viewed Clarkstown’s flow control ordinance as 'just one more instance of local processing requirements that we long have held invalid.'” [emphasis included in original]

The Supreme Court said directly, "The flow control ordinances in this case benefit a clearly public facility, while treating all private companies exactly the same. Because the question is now squarely presented on the facts of the case before us, we decide that such flow control ordinances do not discriminate against interstate commerce for purposes of the dormant Commerce Clause... Unlike private enterprise, government is vested with the responsibility of protecting the health, safety, and welfare of its citizens... These important responsibilities set state and local government apart from a typical private business...

"Laws favoring local government, by contrast, may be directed toward any number of legitimate goals unrelated to protectionism. Here the flow control ordinances enable the Counties to pursue particular policies with respect to the handling and treatment of waste generated in the Counties, while allocating the costs of those policies on citizens and businesses according to the volume of waste they generate.

"The contrary approach of treating public and private entities the same under the dormant Commerce Clause would lead to unprecedented and unbounded interference by the courts with state and local government. The dormant Commerce Clause is not a roving license for federal courts to decide what activities are appropriate for state and local government to undertake, and what activities must be the province of private market competition..."

Access the complete Supreme Court opinion (click here). Access the Supreme Court docket in the case (click here). Access the Second Circuit opinion (click here). Access the Sixth Circuit opinion (click here). Access various parties' briefs in the case posted on the American Bar Association website (click here). Access the WIMS-EcoBizPort Solid Waste issue website for links to additional legal issue resources (click here). [*Solid]