State Governments May Favor Public Business Over Private Business

United Haulers Assn., Inc. v. Oneida-Herkimer Solid Waste Management Authority

“Flow control” ordinances require trash haulers to deliver solid waste to particular facilities. When Oneida county found itself in a solid-waste crisis, the state legislature created the Onedia-Herkimer Solid Waste Management Authority, a public benefit corporation. As of 1989 private haulers could pick up the garbage, but had to deliver it to the Authority, which would collect “tipping fees,” making disposal more expensive than on the open market, but which allowed the Authority to provide additional services (hazardous waste disposal, recycling, etc). United Haulers sued, alleging that the flow control ordinance violated the Commerce Clause.

Under the Dormant Commerce Clause doctrine, the power granted to Congress to control interstate commerce implicitly prohibits states from doing so on their own. In Carbone a town granted a monopoly on garbage handling to a company for 5 years, after which time the town would buy the facility for one dollar. This law was held unconstitutional, over a dissent that argued that the private company was essentially a government facility. The majority implied that the business granted a monopoly was a private entity by stating that the only difference between that case and previous cases was that the business was a local one.
The majority is of the opinion that it is permissible for local government to favor local government over private enterprise, while it would be unconstitutional economic discrimination to favor local businesses over non-local businesses. The concept of discrimination presumes that one is comparing two entities of the same kind, but public and private businesses are not. Besides the obvious, one significant difference is that any burden arising from the law will fall on the very people with the political power to change it – “there is no reason to step in and hand local businesses a victory they could not obtain through the political process.”

Since the law does not discriminate on its face, it will be upheld unless “the burden imposed on [interstate] commerce is clearly excessive in relation to the putative local benefits.” Simply removing the waste from the national market does not satisfy this standard, so there is no reason to look to incidental burdens. While revenue generation is not a local interest that can justify discrimination against interstate commerce, this is not discrimination (because private and public is a genuine distinction) so that is a legitimate purpose.

Justice Scalia, concurring, argues that the dormant Commerce Clause doctrine “is an unjustified judicial invention, not to be expanded beyond its existing domain.” It should be limited to preventing state laws that facially discriminate against interstate commerce, and state laws indistinguishable from the type previously held unconstitutional.

Justice Thomas, concurring, argues that the dormant Commerce Clause “has no basis in the Constitution and has proved unworkable in practice.” The “application of the negative Commerce Clause turns solely on policy consideration, not the Constitution.” Justice Thomas points to the shifting rationale for the dormant Commerce Clause (economic protectionism, slippery slope, national unity, political power, etc).

Justice Alito, with Justices Stevens and Kennedy, dissenting, argues that “the public-private distinction drawn by the Court is both illusory and without precedent.” The private facility in Carbone was not actually private, and the facility here is distinguishable only as the Carbone facility after the town had purchased it. Indeed, the majority in Carborne referred to the facility as if it were owned by the town. Laws discriminating against the sale of liquor from out of state vendors were held unconstitutional until the 21st Amendment (giving States direct control of alcohol), and there is no similar power granted to the states to control trash.

Under the market-participant doctrine, a State is permitted to exercise ‘independent discretion as to parties with whom it will deal’ so long as it acts as a participant and not a regulator. Here, the local government is acting as a regulator, and the fact that the government does not raise the market participant doctrine as a defense does not detract from the policy implications. Justice Alito then responds to the majority’s three principle arguments.

1) That laws favoring local government may be directed to legitimate means, while laws favoring local business are often the product of simple economic protectionism: favoring local government is often a vehicle for economic protectionism, and laws favoring private businesses can have legitimate purposes. If a state favors public business over private business with public shares, that is economic protectionism because it reserves benefits to those who benefit from the local government. The problem here is a focus on means rather than goals.

2) That waste disposal is a traditional government function, and therefore deference to legislation is particularly appropriate: First, any analysis that turns on what functions are integral or traditional is unsound in principle, and where the Court has tried to do so, such attempts have been abandoned. Second, it is not the case that most garbage is handled publicly.

3) That the law in question here simply treats in-state private businesses the same as out-of-state ones: This is a rhetorical trick to avoid the issue of whether there is discrimination against interstate commerce – the real question at issue. “a burden imposed by a State upon interstate commerce is not to be sustained simply because the statute imposing it applies alike to the people of all the States, including the people of the State enacting such a statute.” Brimmer v. Rebman.