Appellate court upholds types of flow control

The United States Court of Appeals for the Second Circuit has handed down two decisions that should have a substantial impact on municipal governments and the solid waste management industry. The decisions uphold two different, non-regulatory means by which municipalities may control the flow of municipal solid waste. With its findings, the court applied the brakes to a judicial trend that, since Clarkstown v. Carbone, has been invalidating almost every system that involved controlling the flow of solid waste.

SSC Corp. v. Town of Smithtown and USA Recycling v. Town of Babylon both involved challenges to solid waste management programs developed by two Long Island, N.Y., towns in response to the court’s finding in Carbone that a Clarkstown flow control law violated the Commerce Clause of the Constitution.

The programs in question abandoned attempts at regulatory flow control — laws and ordinances directing commercial haulers to specific destinations.

Instead, the two towns took over the collection of waste as market participants, contracted for a single hauler (using a competitive process) and paid for the service with taxes and other fees. Babylon’s contractor received free disposal service at the town facility; Smithtown’s paid a stated tipping fee at its facility and was obligated by contract to tip there.

The programs thus achieved “economic flow control” and “contract flow control” and may have established a precedent for future actions by municipalities.

In Smithtown’s case, the town created 10 residential garbage collection districts within its borders, solicited competitive bids for collection and disposal services in each district and signed contracts with the successful bidders.

The bid documents and the contracts specified that the garbage collected was required to be disposed of at the town’s preferred incinerator in nearby Huntington. Additionally, Smithtown passed an ordinance mandating that waste collected within its borders go to the incinerator.

Eventually, the contractor that won the bid on seven of the districts argued that Carbone invalidated the town’s flow control ordinance, and thus it was not bound by the terms of the contract.

The court agreed with the first part but held that the contractual provision regarding the incinerator was binding nonetheless, reasoning that the town was “buying” disposal services and had the right to buy them wherever it chose.

In the Babylon case, the town’s single hauler of commercial waste was paid by the town, which permitted it to dispose of up to 96,000 tons of the garbage per year at its incinerator free of charge.

Unsuccessful bidders for the collection contract and other waste processing facilities challenged the constitutionality of the system. The court disagreed with the plaintiffs, upholding every aspect of Babylon’s solid waste management program.

It explained that what the town had done was exercise its longstanding traditional right to take over the collection of garbage and provide basic sanitation collection and disposal as a governmental service to the businesses in the district, analogizing the deal to police or fire protection.

By so doing, the court said, the town had eliminated the market for collection services, denying both in- and out-of-state haulers access to the market.

It concluded that eliminating the market does not result in discrimination against interstate commerce, since all haulers are equally denied access.

Following the Commerce Clause precedent, the court examined whether the burden on interstate commerce of taking over collection and placing the right of collection in the hands of an independent contractor outweighed the benefits. It found that, despite minor effects, it did not, and that Babylon was protecting a legitimate and compelling interest.