Argument Preview: United Haulers v. Oneida-Herkimer Solid Waste Mgmt. on 1/8

The following argument preview was written by Anna Holloway, a student at Harvard Law School.

In Monday’s second argument, United Haulers Ass’n v. Oneida-Herkimer Solid Waste Management Authority (05-1345), the Supreme Court will again consider the constitutionality of municipal flow ordinances regulating the processing and disposal of waste. Evan M. Tager of Mayer, Brown, Rowe & Maw LLP will argue on behalf of the petitioners, while Michael J. Cahill of New York’s Germano & Cahill, P.C will argue for the respondents. Caitlin J Halligan, Solicitor-General for New York, will argue on behalf of the State as an amicus in support of respondents.

Of central importance is the breadth of the Supreme Court’s 1994 ruling in C & A Carbone Inc v Town of Clarkstown. In Carbone, the Supreme Court held that its Commerce Clause jurisprudence required invalidation of the flow-control ordinance challenged in that case, which required all solid waste generated within the town’s borders to be brought for processing to the privately owned transfer station designated by the town. In the Court’s view, the ordinance deprived competitors of access to the local market and discriminated against them by allowing only the favored operator access to the waste process market. As discriminatory legislation, the ordinance in question was subject to stringent scrutiny, creating a virtually per se prohibition against such legislation under the Commerce Clause.

The flow control ordinances at issue in the present case were enacted by the New York counties of Oneida and Herkimer in 1989 and 1990. Under these ordinances, all solid wastes and recyclables generated within the two counties must be delivered to a facility designated by the respondent Authority. The five facilities designated under the ordinances when this case commenced were all owned by the Authority, which charged considerably more than the market rate to receive the wastes. The remaining segments of the waste disposal services market (collection and post-processing removal) remain open to any private commercial entity.

In 1995, the petitioners filed suit against the Authority and both counties, alleging that the flow control ordinances (as well as related rules and regulations) violate the dormant Commerce Clause. Relying on Carbone, the district court agreed and granted petitioners’ motion for summary judgment in 2000. In the district court’s view, the flow control laws before it were both “virtually indistinguishable” from the laws struck down in Carbone and unconstitutionally discriminatory in that they “[hoard] all local solid waste for the benefit of a preferred local disposal facility.”

The Second Circuit reversed. It distinguished Carbone as involving a privately, rather than publicly, owned, facility. As such, the ordinance before it did not discriminate against out-of-state interests and thus did not violate the Commerce Clause. The Second Circuit reasoned that a common thread in Commerce Clause jurisprudence is that local law discriminates against interstate commerce when it hoards local resources in a manner that favors local business over out-of-state competitors, a scenario not present here. Thus, the court concluded, absent any discriminatory effect, strict scrutiny was not appropriate. Instead, a more lenient test that balances burdens against public benefits, as articulated in Pike v. Bruce Church Inc., should be applied. The court then remanded the case for reconsideration of the ordinances’ constitutionality in light of its decision.

Applying the Pikee test, the district court held that because the ordinances did not favor any in-state commercial interest, there were no detrimental effects to be weighed against the obvious putative benefits, and the ordinance thus clearly withstood scrutiny. On appeal, the Second Circuit again affirmed. It declined to determine whether the flow-control laws impose a burden cognizable under Pike. Instead, it held any such burden – even if cognizable – would be so insubstantial that it would inevitably be outweighed by even a “minimal showing of local benefit.” The benefits in this instance, the court concluded, would “easily clear” this threshold.

The petitioners argue that this case is on all fours with Carbone because the ordinances at issue have precisely the same protectionist effect: they hoard demand for the benefit of an in-state facility and preclude out-of-state competition. The fact that the facility in this case is publicly owned is both irrelevant and a “wholly invalid basis for permitting” an export barrier to be erected by a local government. Not only did the majority in Carbone clearly understand that the transfer facility in that case was effectively public (because the town had an option to buy the facility at a nominal cost), but – in light of Justice Souter’s dissenting view that the facility’s public nature precluded a finding of discrimination – it implicitly rejected the theory that flow-control measures benefiting public facilities are permissible.

The petitioners further argue that the public-private distinction is irreconcilable with both the Supreme Court’s renunciation of formalistic distinctions in resolving Commerce Clause challenges and with the Court’s “local processing” decisions, which have deemed state and local laws protectionist for reasons (which also apply here) other than simply favoring private in-state industry over out-of-state competitors. These cases make clear that discrimination is present whenever parochial state measures restrict the flow of commerce over state lines, and in each of the cases cited, the relevant regulatory foreclosure of the market is equally offensive to the Commerce Clause irrespective of the public or private character of the preferred in-state entity that benefits. Further, the petitioners’ rule is more consistent with the Supreme Court’s decisions applying the market participant doctrine, which holds that where a state or local government enters the market it may not use its regulatory powers to favor itself at the expense of interstate commerce.

Finally, the petitioners argue that even if the ordinances are non-discriminatory, they nonetheless do not withstand scrutiny under the less onerous Pike test: by prohibiting the crossing of waste over state lines, the ordinances impose a severe burden on interstate commerce, as clearly observed by Justice O’Connor in Carbone.

The respondents commence their brief by emphasizing the serious public need which gave rise to the creation of the waste treatment facilities, and the ordinances that govern their operation. Relying on a definition of discrimination (from the Supreme Court’s 1994 decision in Oregon Waste Systems v. Dep’t of Environmental Quality) as “differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter,” the respondents contend that the ordinances do not discriminate. By contrast, such differential treatment existed in each of the waste cases the Court has previously held to involve impermissible discrimination.

As in the lower courts, the respondents seek to distinguish Carbone as involving the use of regulatory power to benefit a private facility. In their view, the argument that favoritism should be equally unconstitutional irrespective of the public or private character of the favored facility fails to accept that, for Commerce Clause purposes, there is or should be a constitutional distinction between the public and private sectors. To this end, the respondents outline how the Oneida-Herkimer system serves public objectives in ways that were not relevant in Carbone, including the placing of control in local government’s hands and the public assumption of environmental risk. In support of this contention, the respondents point to the traditional constitutional distinctions between government service and private sector services. Next, they emphasize the objectives of the ordinances challenged. They note both that the Constitution vests states with the power to exercise their police powers, including with regard to waste disposal, in a non-protectionist, non-discriminatory manner and that courts have regarded regulations to advance health and the environment as non-protectionist and within the exercise of this power.

Finally, respondents contend that the ordinances pass the Pike balancing test. They emphasize that the Commerce Clause has never been construed to prohibit fair, across-the-board regulation that has the effect of reducing the amount of trade in a given commodity, and that the Commerce Clause also does not protect against changes in market conditions – such as changes prompted by regulation aimed at environmental enhancement. To this end, the system created by the ordinances provides benefits that can only be achieved through flow control, and widespread adoption of similar ordinances would not burden interstate commerce.