Opinion ID: 3009773
Heading Depth: 2
Heading Rank: 6

Heading: summary of applicable principles

Text: From our review of the caselaw, we derive the following relevant principles. Local government acts that categorically favor all in-state providers clearly violate the dormant Commerce Clause. Acts that concentrate waste hauling or processing business in the hands of a single or finite set of in-state providers are also suspect from a dormant Commerce Clause perspective. Although such regulations ultimately prohibit the transport of solid waste to nondesignated sites -- which, in these cases, amounts to a prohibition on the export of waste to other states -- the fact that the designated sites happened to be in-state does not, standing alone, establish that the flow control schemes discriminate against interstate commerce. To determine whether these flow control schemes actually discriminate against interstate commerce (triggering strict scrutiny analysis) the court must closely examine: (1) the designation process; (2) the duration of the designation; and (3) the likelihood of an amendment to add alternative sites, for signs that out-of-state bidders do not in practice enjoy equal access to the local market. 0 In Kleenwell Biohazard Waste v. Nelson, 48 F.3d 391, 398 (9th Cir. 1995), the Ninth Circuit held that Washington's scheme requiring solid waste haulers to obtain certification from a state commission did not discriminate against out-of-state interests. The Washington scheme did not, however, designate a landfill or require that certified haulers use a particular facility and thus did not present the same issue we confront today. 31 These precepts are fully consistent with the precedents in this area. While Carbone clearly has broad application, it did not establish a per se rule subjecting all flow control ordinances to strict scrutiny. The Court's discussion reveals that its decision was not based on the fact that waste was required to be processed at a single plant. Instead, the Court regarded Clarkstown's ordinance as just one more instance of local processing requirements that the Court has long held invalid. Id. at 1682-83 (citing cases involving statutes that required various articles of commerce to be processed within their state of origin). And in interpreting Carbone, this Court has focused on the process of selecting waste service providers rather than on the effect of the regulation once a provider or providers have been chosen. See Atlantic Coast, 48 F.3d at 713. That a flow control ordinance requires all waste to be processed or deposited in state for some fixed period of time, therefore, does not necessarily violate the dormant Commerce Clause unless out-of-state businesses did not compete on an even playing field for the designation. If it were the designation of a single site that offended the Commerce Clause, then a scheme hoarding business for an out-of-state interest would be invalid even though the scheme in no way advanced a protectionist purpose or effect. While the process in Atantic Coast clearly favored in state bidders, not every process used to select a single provider is necessarily infected with this same parochialism. We believe, in fact, that a local authority could choose a single provider -- 32 without impermissibly discriminating against inter-state commerce -- so long as the selection process was open and competitive and offered truly equal opportunities to in- and out-of-state businesses. See discussion of Exxon and Atlantic Coast, supra at 24 & 30-31. The burden of showing that the statute discriminates rests on the party challenging the statute. See, e.g., Hughes v. Oklahoma, 441 U.S. 322, 336 (1979) (The burden to show discrimination rests on the party challenging the validity of the statute . . . .); J. Filiberto Sanitation, Inc. v. Dept. of Environmental Protection, 857 F.2d 913, 919 (3d Cir. 1988) (As the party attacking the statute, Filiberto bears the burden of showing discrimination). To make this showing, a plaintiff challenging a designation scheme like the one at issue here must show that the designation process favors, either purposely or in effect, in-state sites. We recognize the difficulties of ascertaining whether long-term designations are really necessary, and whether the selection criteria are truly objective. Courts considering flow control schemes where only in-state facilities are designated must therefore keep this difficulty in mind when scrutinizing the allegedly discriminatory criteria proffered by challengers. Admittedly, we cannot cite any authority for the sort of inquiry we will describe, but this area of law is nascent, and we are constrained to draw upon notions of reasonableness to effectuate the relevant policies. As discrimination may reside in either purpose or effect, a number of things can demonstrate that the designation 33 process impermissibly favored in-state interests/bidders. Certainly, there could be direct evidence of favoritism, as there was in Atlantic Coast, or corrupt payments. Or a seemingly neutral bid specification with an entirely legitimate purpose, such as a specified proximity requirement, may have the effect of giving in-state interests an advantage. For instance, the incentive to protect a municipal investment, exemplified by the attempt in Carbone to minimize the town's exposure under the guarantee agreement, would impermissibly skew the process against a new -- potentially out-of-state -- provider attempting to gain designation in order to compete with an existing in-state facility. Moreover, there may be aspects of a flow control regime that appear to be so unnecessarily restrictive that a factfinder reasonably could conclude that their real purpose was to entrench the local interest once selected by a neutral designation process. Examples of such regulations are excessively long periods of exclusive service rights under the designation, or an absence of any allowance or the absence of any real possibility for the designation of additional, potentially out-of-state sites.0 0 There are, of course, others. While we are reluctant to pass on the reasonableness of the long-term tipping fees contracted for by some municipalities implementing flow control, there may be cases where the contractual fee is so much higher than both the spot rate and the rates prevailing at the time of contract that one could conclude that the designation was being used as a vehicle to deliver an extraordinary profit to a favored facility. 34 The governmental defendants can rebut a putative showing of discrimination by presenting evidence demonstrating that the designation process was open, fair, and competitive, i.e., determined by objective criteria which do not have the effect of favoring in-state interests. Courts should require that government defendants produce substantial evidence in order to rebut the plaintiff's showing. Such evidence might include bid solicitation, selection criteria, evaluation of bidders, et alia, but such evidence alone may be insufficient to prove the flow control scheme's neutrality. The government defendants in these cases might also present additional evidence, such as statistical evidence or expert testimony, demonstrating that different aspects of the designation process are as neutral to out-of-state interests in practice as they appear on their face. Municipalities that have adopted flow control schemes would also be wise to demonstrate that the goals of the designation process included capacity assurance and the protection of the public health and safety. If the government defendant cannot satisfactorily demonstrate that the ordinance does not have the purpose or effect of discriminating against interstate commerce, it must then prove that the ordinance survives strict scrutiny analysis (in order to have the ordinance upheld). This comports with other dormant Commerce Clause contexts where, once a plaintiff has shown that a law or regulation discriminates against interstate commerce, the burden falls on the State to demonstrate both that the statute 'serves a legitimate local 35 purpose,' and that this purpose could not be served as well by available nondiscriminatory means. Maine v. Taylor, 477 U.S. at 138, 106 S. Ct. at 2447 (quoting Hughes v. Oklahoma, 441 U.S. 322, 336, 99 S. Ct. 1727, 1736 (1979). Of course, if the defendants succeed in the first showing, then the ordinance would be subject only to the Pike balancing test under which the plaintiff must prove that the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. See Pike, 397 U.S. at 142, 90 S. Ct. at 847.0