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Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County

May 1, 1997

ATLANTIC COAST DEMOLITION & RECYCLING, INC.,

PLAINTIFF,

v.

BOARD OF CHOSEN FREEHOLDERS OF ATLANTIC COUNTY; ATLANTIC COUNTY UTILITIES AUTHORITY; BOARD OF CHOSEN FREEHOLDERS OF CAMDEN COUNTY; POLLUTION CONTROL FINANCING AUTHORITY OF CAMDEN COUNTY; SCOTT A. WEINER, INDIVIDUALLY AND IN HIS CAPACITY AS COMMISSIONER OF NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION AND ENERGY,

DEFENDANTS,

MERCER COUNTY IMPROVEMENT AUTHORITY; HUDSON COUNTY IMPROVEMENT AUTHORITY; ESSEX COUNTY UTILITIES AUTHORITY; PASSAIC COUNTY UTILITIES AUTHORITY; CAPE MAY COUNTY MUNICIPAL UTILITIES AUTHORITY; CAMDEN COUNTY ENERGY RECOVERY ASSOCIATES, L.P.,

INTERVENOR-DEFENDANTS

(CAMDEN NEW JERSEY DISTRICT CIVIL NO. 93-CV-02669)

C & A CARBONE, INC.; BRET SCHUNDLER, MAYOR, IN HIS CAPACITY AS MAYOR OF CITY OF JERSEY CITY; JOHN ROONEY, MAYOR, IN HIS CAPACITY AS MAYOR OF BOROUGH OF NORTHVALE; NATIONAL SOLID WASTE MANAGEMENT ASSOCIATION, NEW JERSEY CHAPTER; WASTE MANAGEMENT ASSOCIATION OF NEW JERSEY; CITY OF PASSAIC; CITY OF PATERSON; DWIGHT DESTEFAN, MAYOR, INDIVIDUALLY AND IN HIS CAPACITY AS MAYOR OF THE TOWNSHIP OF RIVER VALE,

PLAINTIFFS,

v.

ROBERT C. SHINN, JR., INDIVIDUALLY AND IN HIS CAPACITY AS COMMISSIONER OF NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION AND ENERGY; NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION AND ENERGY; LARRY J. MCCLURE, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS EXECUTIVE DIRECTOR OF THE BERGEN COUNTY UTILITIES AUTHORITY; BERGEN COUNTY UTILITIES AUTHORITY; MARK GUARINO, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS DIRECTOR OF THE BERGEN COUNTY HEALTH DEPARTMENT; BERGEN COUNTY HEALTH DEPARTMENT; KENNETH BLANE, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS EXECUTIVE DIRECTOR OF THE HUDSON COUNTY IMPROVEMENT AUTHORITY; HUDSON COUNTY IMPROVEMENT AUTHORITY; CAROL ANN WILSON, INDIVIDUALLY AND IN HER OFFICIAL CAPACITY AS DIRECTOR OF THE HUDSON COUNTY HEALTH DEPARTMENT; WILLIAM P. SCHUBER, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS COUNTY EXECUTIVE FOR BERGEN COUNTY; ROBERT C. JANISZEWSKI, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS COUNTY EXECUTIVE FOR HUDSON COUNTY; PASSAIC COUNTY UTILITIES AUTHORITY; ANTHONY ROSS, INDIVIDUALLY AND IN HIS CAPACITY AS EXECUTIVE DIRECTOR; NICOLA R. DIDONNA, INDIVIDUALLY AND IN HIS CAPACITY AS COUNTY EXECUTIVE FOR THE COUNTY OF PASSAIC

(CAMDEN NEW JERSEY DISTRICT CIVIL NO. 94-CV-03244)

NATIONAL SOLID WASTES MANAGEMENT ASSOCIATION; WASTE MANAGEMENT ASSOCIATION OF NEW JERSEY; AND C & A CARBONE,

APPELLANTS IN 96-5567

NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION; SCOTT A. WEINER; AND ROBERT C. SHINN, JR., COMMISSIONER,

APPELLANTS IN 96-5568

CAPE MAY COUNTY MUNICIPAL UTILITIES AUTHORITY ("CMCMUA")

APPELLANTS IN 96-5569

ESSEX COUNTY UTILITIES AUTHORITY; HUDSON COUNTY IMPROVEMENT AUTHORITY; MERCER COUNTY IMPROVEMENT AUTHORITY; AND PASSAIC COUNTY UTILITIES AUTHORITY,

APPELLANTS IN 96-5570



On Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 93-cv-02669)

Before: STAPLETON, ROTH and GARTH, Circuit Judges

ROTH, Circuit Judge

Filed May 1, 1997

Argued December 17, 1996

OPINION OF THE COURT

This case comes before us a second time for a determination whether New Jersey's regulation of the disposal of solid waste is constitutional under the Commerce Clause of the Constitution. New Jersey's "flow control" statutes require waste management districts to contract with designated waste facilities for the disposal of locally generated waste. Following the Supreme Court's decision in C & A Carbone, Inc. v. Town of Clarkstown, 114 S.Ct. 1677 (1994), we held that these laws discriminated against interstate commerce in purpose and effect by disfavoring out-of-state facilities and inhibiting the export of solid waste from New Jersey. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic Cty., 48 F.3d 701, 712-13 (3d Cir. 1995)("Atlantic Coast I"). We then remanded the case to the district court to determine whether the flow control laws could meet heightened scrutiny under the "dormant" Commerce Clause. *fn1 Id. at 717-18.

After hearing extensive evidence, the district court concluded that New Jersey had not met its burden of demonstrating that it lacked alternate means of achieving its legitimate interest in creating a safe and effective system for in-state solid waste disposal. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic Cty., 931 F.Supp. 341, 359 (D.N.J. 1996). Uponfinding New Jersey's flow control laws unconstitutional, the district court granted a permanent injunction both to plaintiffs who process and dispose of construction and demolition waste (so-called "C & D" waste), and to plaintiffs who process other types of solid waste. *fn2 The district court then issued a two-year post-appeal stay on the permanent injunction, except as it applied to processors of C & D waste. Id.

The Carbone plaintiffs and the defendants have appealed the district court's decision. We will affirm the district court's findings that New Jersey's flow control laws and regulations are unconstitutional insofar as they discriminate against out-of-state waste processing facilities. We will not, however, affirm the lower court's post-appeal stay because the record cannot support the district court's exercise of "equitable discretion" to delay the enjoining of an admittedly unconstitutional regulatory system.

The district court had jurisdiction over this case pursuant to 28 U.S.C. Section(s) 1331. We have jurisdiction under 28 U.S.C. Section(s) 1291.

I. FACTS

As this nation's prosperity and consumption have increased over the years, so too has its solid waste. The processing and placement of garbage pose substantial economic and environmental concerns. In the past, states have attempted to meet those concerns by limiting or banning the importation of solid waste. The Supreme Court, however, has struck down these laws as unconstitutional because they discriminate against interstate commerce and thereby invoke heightened or rigorous scrutiny under the dormant component of the Commerce Clause. See City of Philadelphia v. New Jersey, 437 U.S. 617, 98 S.Ct. 2531 (1978); Fort Gratiot Landfill v. Michigan Dep't of Natural Resources, 504 U.S. 353, 112 S.Ct. 2019 (1992).

More recently, states and municipalities have erected barriers to the exportation of solid waste in the hope that in-state control of solid waste facilities will protect their communities from environmental harm, as well as guarantee a certain level of business for in-state processors. See Phillip Weinberg, Congress, the Courts, and Solid Waste Transport: Good Fences Don't Always Make Good Neighbors, 25 Envtl. L. 57 (1995). Like the previous bans on importation of solid waste, the locally enacted barriers against the exportation of solid waste implicate the dormant Commerce Clause because they raise concerns about state protectionism and "balkanization." Garbage, however unpleasant or unwanted, carries substantial value for those with the desire or know-how to dispose of it. In Carbone, the Supreme Court held that laws limiting the export of solid waste may be subject to heightened scrutiny because "[t]he Commerce Clause presumes a national market free from local legislation that discriminates in favor of local interests." Carbone, 114 S.Ct. at 1683 (striking down local ordinance requiring all solid waste to be processed through local transfer station).

The law challenged in this case falls into the second category of waste-control laws because it places barriers on the exportation of solid waste.

A. New Jersey's Regulation of the Disposal of Solid Waste

This Court has described New Jersey's comprehensive solid waste disposal system in detail in Atlantic Coast I, 48 F.3d at 704-708. We will provide a brief review of that system as it impacts this case.

In response to a waste disposal crisis, New Jersey enacted the Solid Waste Management Act ("SWMA"), N.J.S.A. Section(s) 13:E-1 et seq., and the Solid Waste Utility Control Act ("SWUCA"), N.J.S.A. Section(s) 48:13A-1 et seq. in 1970 to provide a safe, comprehensive and effective means of solid waste disposal within the state. These statutes strictly control the collection, transportation and processing of solid waste generated within the state, thus earning the appellation "flow control laws." Under these laws, any waste disposal facility, regardless of its ownership or location, must clear two substantial hurdles before it disposes of solid waste generated within New Jersey. First, the facility must obtain a contract with one of New Jersey's twenty-two waste management districts. Unless a facility has been designated by a waste management district, that facility cannot dispose of locally generated waste. Second, even if the facility contracts with a district for service, the waste disposal facility must obtain the approval of the State's Department of Environmental Protection (hereinafter "the State" or NJDEP). Under this regime, out-of-state facilities have rarely been authorized to dispose of New Jersey's solid waste. *fn3

Under SWMA, New Jersey is divided into twenty-two solid waste management districts, which include the State's twenty-one counties and the Hackensack-Meadowlands District. N.J.S.A. Section(s) 13:1E-19. The districts have formulated long-term solid waste disposal plans in accordance with the State's laws and regulations. N.J.S.A. Section(s) 13:1E-20. These plans have had to meet NJDEP's approval. See N.J.S.A. Section(s) 13:1E-24. Management districts have chosen between delegating their waste disposal responsibilities to designated municipal authorities within the district or exercising direct control over waste disposal themselves. *fn4 Municipal authorities and districts in turn have met the State's waste disposal obligations by contracting with or operating their own waste disposal and recycling facilities.

Pursuant to the flow control laws, several waste disposal authorities have assumed substantial debt obligations to build waste disposal facilities "to assure the safe and efficient disposal of solid waste generated in their districts." Atlantic Coast II, 931 F.Supp. at 347 Para(s) 5. The district court found that "[t]he solid waste public debt outstanding in New Jersey as of December 31, 1994, was $1.65 billion, which is the total of 53 separate bonds issued by New Jersey local authorities or counties." Id., at 348 Para(s) 12. Currently, the disposal facilities service their debt by charging "tipping fees" for disposing of waste. *fn5 The fees charged by the designated facilities are significantly higher than the fees charged by their out-of-state counterparts. Id., at 349 Para(s) 17. *fn6

Once an authority has chosen a particular private or public entity to service its waste disposal needs, that entity must seek approval from NJDEP (through registration and issuance of a permit) prior to commencing service. N.J.S.A. Section(s) 13:1E-5. A facility cannot obtain a permit unless it is designated by the municipal district or authority in its waste disposal plan. N.J.S.A. Section(s) 13:1E-4(b). Regional Recycling, Inc. v. State Dep't of Environmental Protection, 606 A.2d 817 (N.J. Super. App. Div. 1991). All waste generated within the state must be directed to the processing facility designated by the district or municipal authority. See N.J.S.A. Section(s) 48:13A-4(c). The designation of the particular facility for waste disposal in each waste management district is codified in NJDEP regulations. N.J. Admin. Code tit. 7, Section(s) 7:26-6.5 (Supp. 1996).

Although a waste management district or authority may contract with an out-of-state facility for waste disposal, NJDEP's policy of attaining self-sufficiency has favored operators that have facilities within the state or that are willing to construct a facility there. See Atlantic Coast I, 48 F.3d at 707-708. Waste management districts desiring to enter into agreements with out-of-state facilities have had to certify to NJDEP that no other sites within the district meet the district's waste disposal needs. N.J.S.A. Section(s) 13:1E-21(b)(3). The certification provision on its face does not appear to prohibit out-of-state solid waste facility operators from competing for an agreement to process a district's waste. *fn7 Nevertheless, the certified processors for each district, presently listed in N.J.A.C. Section(s) 7:26-6.5, have been chosen under the NJDEP policy of reducing dependence on facilities outside the state for waste disposal services. See Atlantic Coast I, 48 F.3d at 707 (discussing NJDEP's self-sufficiency policy). As the district court stated at the first Atlantic Coast trial: "Although it is not the subject of a clear legislative direction [sic], it is equally clear that [NJDEP] administers the law with the specific goal that all waste generated in New Jersey be disposed of within the borders of the state." Atlantic Coast I, 48 F.3d at 707 (quoting district court) ([sic] in original). The imposition of this self-sufficiency policy on the selection of waste disposal facilities has resulted in the discrimination against out-of-state processors which we found in Atlantic Coast I.

Under the present flow control system, those who violate New Jersey law by disposing of solid waste at facilities not designated in N.J.A.C. Section(s) 7:26-6.5 risk the imposition of significant penalties. Section 13:1E-9 of the SWMA authorizes NJDEP's commissioner to take various civil and administrative actions against those who violate any provision of P.L.1970, c.39 (the SWMA), or any code, rule or regulation adopted pursuant to that law. In addition, Section 13:1E-9(e) authorizes civil penalties totaling as much as $50,000 for each violation of the solid waste laws "provided that each day during which the violation continues shall constitute an additional, separate and distinct offense." N.J.S.A. Section(s) 13:1E-9(e). The State has employed this provision to penalize undesignated waste disposal facilities and enjoin them from engaging in the unauthorized collection and disposal of solid waste generated within the state. See e.g. State of New Jersey, Dep't of Environmental Protection v. Interstate Recycling, Inc., 632 A.2d 526 (N.J. Super. App. Div. 1993) (NJDEP may pursue injunction against unlicensed waste disposal facility). *fn8

Other provisions enforcing the requirement that waste disposal facilities be designated under N.J.A.C. Section(s) 7:26-6.5 include Section 13:1E-9.4 of SWMA, which authorizes civil forfeiture of all conveyances used or intended for use in the transport or unlawful disposal of solid waste. N.J.S.A. Section(s) 13:1E-9.4(d). In addition, persons who collect, dispose of or transport solid waste to undesignated sites subject themselves individually to civil fines of up to $10,000 for each day of violation. N.J.S.A. Section(s) 13:1E-9.4. Finally, an individual who engages in the unauthorized collection, transport or disposal of solid waste is guilty of a crime in the fourth degree, which carries with it the penalty of up to 18 months in prison. N.J.S.A. Section(s) 48:13A-12(a).

Taken as a whole, the waste disposal laws present substantial barriers to out-of-state firms wishing to collect, transport and process any of the waste generated within New Jersey. The State is able to enforce this regulatory system through its impressive array of rules, regulations, fines and other penalties.

B. Procedural History

The procedural history of this case is well documented by the district court in Atlantic Coast II, 931 F.Supp. at 343. Atlantic Coast, a Pennsylvania corporation operating a transfer station and recycling center for construction and demolition (C & D) debris, began this action on June 23, 1993, when it filed a complaint under 42 U.S.C. Section(s) 1983 against the Commissioner of NJDEP, seeking a declaratory judgment that the codification of waste disposal designations at N.J.A.C. Section(s) 7:26-6.5 violated the Commerce Clause and seeking a permanent injunction against the enforcement of this regulation. *fn9 Atlantic Coast also promptly moved for a preliminary injunction.

On September 8, 1993, the district court denied Atlantic Coast's motion and found in favor of NJDEP. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders, 1993 U.S. Dist. Lexis 20,810 (D.N.J. Sept. 8, 1993). In doing so, the court followed our decision in J. Filiberto Sanitation, Inc. v. New Jersey Dep't of Envtl. Protection, 857 F.2d 913 (3d Cir. 1988), and analyzed New Jersey's waste disposal system under the balancing test enunciated by the Supreme Court in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847 (1970), rather than under the more rigorous test set forth in Maine v. Taylor, 477 U.S. 131, 138, 106 S.Ct. 2440, 2447 (1986). Under the Pike test, a statute that burdens interstate commerce will be upheld unless that burden "is clearly excessive in relation to the putative local benefits." Pike, 397 U.S. at 142, 90 S.Ct. at 847. By contrast, the Maine test holds that statutes that discriminate against interstate commerce are unconstitutional unless the State can demonstrate that it has no other way of achieving a legitimate interest. The district court concluded that the benefits of the State's waste disposal system outweighed the burden placed on out-of-state facilities like Atlantic Coast, and on February 24, 1994, it entered final judgment in favor of defendants. Atlantic Coast appealed.

While Atlantic Coast's appeal was pending, the Supreme Court rendered its decision in C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 114 S.Ct. 1677 (1994). In Carbone, the Court concluded that the town of Clarkstown's local waste control ordinance -- somewhat similar to the waste control regulations in New Jersey -- discriminated against interstate commerce and therefore triggered strict scrutiny under the dormant Commerce Clause. The Court then held that Clarkstown had not met this level of heightened scrutiny. Carbone, 114 S.Ct. at 1684.

This Circuit then applied the principles set forth by the Supreme Court in Carbone to Atlantic Coast's appeal and concluded that New Jersey's waste control laws discriminated -- in purpose and practical effect -- against interstate commerce. See Atlantic Coast I, 48 F.3d at 712. We remanded the case to the district court to allow it to apply the correct test under the dormant Commerce Clause. We also provided that Atlantic Coast could re-apply for injunctive relief since the district court's prior decision "was based primarily on its conclusion that Atlantic Coast had failed to demonstrate a likelihood of success on the merits of its challenge." Atlantic Coast I, 48 F.3d at 718. Since the applicable test entailed heightened scrutiny as defined by Maine v. Taylor, "the likelihood of success issue is a materially different one from that which the district court previously addressed." Id.

Atlantic Coast filed a new motion for a preliminary injunction on April 11, 1995. At the same time, the district court permitted several County Authorities to intervene as defendants. *fn10 In the meantime, on July 11, 1994, C & A Carbone Inc., a New York waste disposal facility, along with the Waste Management Association of New Jersey and the National Solid Wastes Management Association, had filed an action against NJDEP seeking declaratory and injunctive relief, as well as damages. *fn11 Unlike Atlantic Coast, Carbone processes all types of solid waste, not just C & D waste. *fn12 Carbone's case was stayed pending this Court's decision in Atlantic Coast I. Following our remand of Atlantic Coast I, the two cases were consolidated. At the request of the parties, the district court re-opened the record and extensive discovery ensued. Carbone joined Atlantic Coast in its motion for a preliminary injunction.

On June 9, 1995, the district court conditionally granted Atlantic Coast's motion for a preliminary injunction as to C & D waste but denied Carbone's, based on the court's analysis of various equitable considerations. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders, 893 F. Supp. 301 (D.N.J. 1995). *fn13 The Carbone plaintiffs did not appeal this decision. The parties then conducted additional discovery.

Finally, on July 15, 1996, the district court issued a permanent injunction in favor of the plaintiffs, concluding that the defendants had failed to uphold their burden of demonstrating under the heightened scrutiny test of the dormant Commerce Clause that they lacked alternate means of achieving their solid waste disposal program. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders, 931 F. Supp. 341 (D.N.J. 1996) (hereinafter Atlantic Coast II). In entering final judgment in favor of the plaintiffs, the district court observed that "defendants have not even attempted to present a feasible nondiscriminatory alternative to the Court, but have merely caricatured each of the tools that may be used in building a new system." Atlantic Coast II, 931 F. Supp. at 351. However, although the court granted the Carbone plaintiffs a permanent injunction, it stayed that injunction for a period of "two years following the date on which this case is no longer subject to a right of appeal, or is no longer pending on appeal or on Petition for [Certiorari] to the United States Supreme Court." Id. at 358. The stay did not apply to the Atlantic Coast plaintiffs, who collect and dispose only of C & D waste.

Shortly thereafter, in an unrelated proceeding, Waste Management of Pennsylvania, Inc. v. Shinn, 938 F.Supp. 1243 (D.N.J. 1996), a New Jersey district court found that the State's policy of ensuring self-sufficient waste disposal "discriminates against out-of-state waste disposal facilities in favor of in-state economic interests without serving any legitimate local interest which could not be addressed by less restrictive means." Waste Management, 938 F.Supp. at 1256. Accordingly, the district court enjoined the State from taking any action to "preclude the use of out-of-state waste disposal facilities solely because said facilities are located outside of New Jersey." Waste Management, 938 F.Supp. at 1263. At the request of the State, the district court then modified the injunction as follows:

ORDERED that the Commissioner of the Department of Environmental Protection is permanently enjoined from implementing New Jersey's self-sufficiency policy as mandated under the State Plan to abrogate existing valid contracts or to reject or foreshorten contracts submitted to the New Jersey Department of Environmental Protection for review.

Waste Management of Pennsylvania, Inc. v. Shinn, No. 94-1983 (D.N.J. October 29, 1996). *fn14

This injunction recognizes the conclusion that we reached in Atlantic Coast I that New Jersey's flow control laws discriminate against interstate commerce. By enjoining the State's future implementation of its self-sufficiency policy, the modified injunction removes only one of the barriers to New Jersey's waste disposal market for out-of-state waste disposal facilities. The injunction does not undo the twenty-two waste management district's plans for waste disposal. Neither does the Waste Management injunction affect N.J.A.C. Section(s) 7:26-6.5, which codifies the twenty two districts' designations of proper facilities for waste disposal. The Carbone plaintiffs therefore remain excluded from New Jersey's waste disposal market.

II. THE APPEAL

The County Authority defendants appeal the district court's decision on the ground that the district court should not have applied heightened scrutiny to the waste flow regulations. The State appeals the district court's decision on the ground that, even if heightened scrutiny was warranted, the State established at trial that it had no other means by which to achieve its legitimate interests in guaranteeing safe and effective solid waste disposal and protecting the financial integrity of the local entities which depend on flow control laws for operating revenues and debt service. Finally, the Carbone plaintiffs appeal the district court's stay as unconstitutional.

We shall examine each of these arguments in turn.

A. Choosing the Proper Test

We first review the district court's application of the heightened scrutiny test to New Jersey's flow control laws. According to the County Authorities, the district court applied an inappropriate level of scrutiny on remand. The County Authorities also argue that the district court should have "severed" the State's policy of ensuring self-sufficient waste disposal from the rest of New Jersey's flow control statutes and then analyzed the twenty-two district waste disposal plans separately, on a district by district basis. These arguments lack merit, as they ignore our earlier decision in Atlantic Coast I.

A statute triggers heightened scrutiny under the dormant Commerce Clause whenever that statute has a discriminatory purpose or effect on interstate commerce. See Harvey & Harvey, Inc. v. County of Chester, 68 F.3d 788, 797-98 (3d Cir. 1995), cert. denied, 116 S.Ct. 1265 (1996). In Carbone, the Supreme Court held that flow control laws that discriminate against out-of-state waste facilities trigger heightened scrutiny because they hoard a valuable economic resource such as garbage. 114 S.Ct. at 1682-83. A discriminatory state statute is per se unconstitutional "save in a narrow class of cases in which the municipality can demonstrate, under rigorous scrutiny, that it has no other means to advance a legitimate state interest." Id. at 1683, citing Maine v. Taylor, 477 U.S. 131, 106 S.Ct. 2440 (1986).

Following the Supreme Court's decision in Carbone, we held that New Jersey's solid waste disposal laws, "in effect and by design," discriminated against interstate commerce and therefore triggered heightened scrutiny under the dormant Commerce Clause. Atlantic Coast I, 48 F.3d at 710. We described New Jersey's flow control laws as follows:

Like the governmental entities in the other cases involving local processing requirements, New Jersey is regulating a market which the Commerce Clause intended to be open to non-local competitors. More specifically, New Jersey is regulating the market for solid waste processing and disposal services in each of the districts by directing district consumers of those services to utilize a favored service provider who, in the absence of exceptional circumstances, operates a local facility. It necessarily follows, we conclude, that any Commerce Clause analysis of New Jersey's flow control regulations must employ the heightened scrutiny test and that the district court erred by subjecting them only to the balancing test of Pike.

Id., at 710-11 (emphasis added). Based on our conclusion that the State's solid waste program was discriminatory, we remanded the case to the district court to determine whether the statute nevertheless fell into that "narrow class of cases" in which the State could prove that it lacked viable means of satisfying a legitimate, nondiscriminatory interest. Id., at 717.

On remand, the defendants argued that a later opinion of this Circuit, Harvey & Harvey, Inc. v. County of Chester, 68 F.3d 788 (3d Cir. 1995), "clarified" our earlier decision in Atlantic Coast I. In Harvey, we held that the Supreme Court's decision in Carbone did not "establish a per se rule subjecting all flow control ordinances to strict scrutiny." Harvey, 68 F.3d at 800. According to the County Authorities, the district court, in light of our decision in Harvey, should have severed the State's purpose of self-sufficiency from our consideration of the statute in Atlantic Coast I and should have then reviewed the flow control laws and the individual waste disposal plans of the twenty-two waste disposal districts separately to determine whether they were still discriminatory. The district court rejected the County Authorities' request. "The Third Circuit found the system to be discriminatory, and the Court will not revisit the holding." Atlantic Coast II, 931 F. Supp. at 346.

We affirm the district court's decision because our determination in Atlantic Coast I that New Jersey's flow control laws discriminated against interstate commerce was based not just on New Jersey's stated goal to create a self-sufficient in-state waste disposal program. It was also based on the management districts' selection of facilities and the codification of this selection by state regulation. As we noted in Harvey, a law that directs waste to a particular facility will not necessarily violate the dormant Commerce Clause as long as out-of-state operators are given an even chance to compete for the opportunity to dispose of the state or district's waste. See 68 F.3d at 802. In New Jersey, however, state policy had precluded such open competition and the list of facilities designated in N.J.A.C. Section(s) 7:26-6.5 reflects that policy. As a result of this discriminatory policy, the flow control regulations, through Section(s) 7:26-6.5, have limited the facilities that can accept waste generated in a particular district to those so designated in the regulation. Because the policy has affected the existing designations, it cannot be "severed" from the rest of the statute for purposes of review under the Commerce Clause.

The fact that a district court in the Waste Management case has enjoined the State of New Jersey from acting on its policy of abrogating, rejecting or foreshortening contracts between management districts and out-of-state waste disposal facilities does not alter our determination that New Jersey's flow control statutes discriminate against out-of-state facilities. See Waste Management, No. 94-1983, amended order (D.N.J. October 29, 1996). First, the Waste Management injunction, as modified by the district court, applies only prospectively to future contracts between management districts and waste disposal facilities. It does not affect the current contractual agreements codified at N.J.A.C. Section(s) 7:26-6.5, which are the result of a discriminatory process. Second, the Waste Management injunction addresses only the state's approval or ratification of a waste management district's disposal plan, and not the district's initial choice of a facility. Our finding of discriminatory purpose and effect in Atlantic Coast I, however, applied both to the waste management district's choice of a facility to service its needs and to the State's approval of that choice.

In response to the argument of the County Authorities, Atlantic Coast urges that the defendants should not use this appeal to relitigate issues already resolved in prior rulings by this Court. We agree. The law of the case doctrine bars our reconsideration of issues previously resolved by an earlier panel. See Fagan v. City of Vineland, 22 F.3d 1283, 1290 (3d Cir. 1994); Hayman Cash Register Co. v. Sarokin, 669 F.2d 162 (3d Cir. 1982). Since none of the traditional exceptions to the law of case doctrine apply here (our previous decision was not clearly erroneous, no intervening "new law" has been decided other than the district court's injunction in Waste Management, and no new facts have surfaced), there is no reason to revisit the issue of whether the New Jersey waste disposal system is discriminatory. See generally Bridge v. United States Parole Commission, 981 F.2d 97, 102 (3d Cir. 1992) (discussing general exceptions to law of case doctrine). A previous panel found discriminatory effect in Atlantic Coast I, 48 F.3d 701. We are bound by that determination. Nothing we said in Harvey changes our decision in Atlantic Coast I as it applies to the facts of this case. Accordingly, we affirm the district court's application of heightened scrutiny to New Jersey's flow control statutes.

B. Application of Heightened Scrutiny

Concluding that the district court correctly applied heightened scrutiny to New Jersey's waste disposal statutes, we now turn to the district court's finding that the flow control statutes were unconstitutional because the State of New Jersey did not uphold its burden under the heightened scrutiny test. *fn15 While we review the lower court's application of constitutional law de novo, we will reverse the district court's factual findings only if they are clearly erroneous. Fabulous Assoc., Inc. v. Pennsylvania Public Utility Comm'n, 896 F.2d 780, 783 (3d Cir. 1990).

Once a district court finds that a state statute discriminates against interstate commerce, "the burden falls on the State to demonstrate both that the statute `serves a legitimate local interest,' and that this purpose could not be served as well by available nondiscriminatory means." Maine v. Taylor, 477 U.S. at 139, 106 S.Ct. at 2447; Hughes v. Oklahoma, 441 U.S. 322, 99 S.Ct. 1727 (1978). We now engage in the two-part inquiry set forth by Maine and Hughes. *fn16

The district court found five legitimate justifications for New Jersey's solid waste disposal regulatory system:

(i) assurance of long-term disposal capacity for all waste generated in New Jersey; (ii) support for development of environmentally safe capacity; (iii) promotion of recycling and source reduction; (iv) assistance in the prevention of illegal dumping and the control of illegal facilities; and (v) protection of the fiscal integrity of the governmental entities.

Atlantic Coast II, 931 F. Supp. at 346, Para(s) 1. We agree that these five interests are legitimate objectives of the State. To justify a discriminatory statute, however, a state must do more than cite a legitimate interest; it must also show that it lacks alternative nondiscriminatory means of achieving that interest. Here, we agree with the district court that the defendants have failed to satisfy this second prong.

In Atlantic Coast II, the district court stated that "[d]efendants have not even come close to proving that a constitutional, nondiscriminatory alternative cannot address the various interests identified in Para(s) 1 and 21, supra, as well or better than the current flow control regulations." Atlantic Coast II, 931 F. Supp. at 351, Para(s) 25. The district court further observed:

The above-market tipping fees that constitute the heart of New Jersey's flow control system are more or less a hidden tax paid by New Jersey residents. The tipping fees are used to cover not only the debt service of the bonds issued to fund facilities under flow control, but also to cover the fixed costs of operating waste disposal facilities, financing recycling programs and other environmentally friendly recovery projects, and developing long-term disposal plans. Those activities could be financed through up-front taxes, user fees or other charges that do not discriminate against interstate commerce. Even if there are significant costs to implementing the necessary revisions to the current flow control system, nothing in the record suggests that these would be exorbitant or beyond the capabilities of reasonable fundraising alternatives. And, in any case, the threat of some increase in costs cannot negate the constitutional mandate of the dormant Commerce Clause.

Id., at 353-54 (emphasis added). We affirm the district court's interpretation of the dormant Commerce Clause and its application of the Clause to the facts.

The County Authorities and the State argue, however, that the flow control laws are indispensable. First, they claim that these laws are necessary to prevent illegal dumping and other environmentally unsound practices.

Second, they contend that these laws are necessary to underwrite the cost of paying off the debt on the locally constructed waste disposal facilities. In regard to the first of these contentions, neither the County Authorities nor the State has cited record evidence to show that alternative measures are unable to prevent illegal or unsafe dumping of waste. *fn17 Accordingly, we will consider their argument only as it pertains to the financial effect of giving up the current flow control system.

The County Authority defendants and State defendants each attack the district court's decision on slightly different grounds. The County Authorities argue that "Plaintiffs/Appellants have offered no evidence that there was any alternative, as of 1970, that could have achieved the lawful public purposes `as well' with less discrimination against interstate commerce." County Authorities Br., at 11 (emphasis added). This argument lacks merit for several reasons. First, it locates the burden of proof with the wrong party. The Supreme Court has stated quite clearly that once a statute triggers heightened scrutiny, the party defending the statute bears the burden of proof. See Maine, 477 U.S. at 138, 106 S.Ct. at 2447. Second, the County Authorities focus too much attention on the phrase "as well" when defining the content of the heightened scrutiny test. The heightened scrutiny test, however, concerns itself with questions of viability, not questions of convenience. See Carbone I, 114 S.Ct. at 1683. Finally, the County Authorities' argument fails because it measures the viability of the nondiscriminatory alternatives in terms of past and not present events. The Supreme Court has held that environmental and economic arguments must be rejected "absent the clearest showing that the unobstructed flow of interstate commerce itself is unable to solve the local problem." Id. (emphasis added). The operative word in this sentence is the verb "is". The question is not what was the best system for New Jersey when the statutes were adopted, but rather whether any non-discriminatory system could now serve New Jersey's legitimate goals of solid waste disposal in an efficient and environmentally safe manner. Because the County Authorities have failed to address this question with evidence relating to the present time, they have not fulfilled their burden under the dormant Commerce Clause.

Like the County Authorities, the State of New Jersey has also failed to demonstrate why the district court's factual determination that nondiscriminatory alternatives were at least feasible was clearly erroneous. The gravamen of the State's defense is that the elimination of flow control laws will force local waste disposal authorities to compete with out-of-state firms. Competition, in turn, will preclude local facilities from charging inflated tipping fees. Consequently, local facilities constructed with bond money will attract lower volumes of waste and will lose operating revenue, reducing their ability to pay off their debt to the bondholders. Debt issues will risk default, and local waste disposal facilities will incur operating deficits. Finally, default on the solid waste disposal facilities will affect the health of debt instruments issued by other government entities in New Jersey. Atlantic Coast II, 931 F.Supp. at 350, Para(s) 20. The State defendants descriptively dub this scenario as the "death spiral."

Although we concede that the consequences of defaulting on the local waste facilities' substantial loans cannot be minimized or ignored, we disagree with the State's presumption that its problems are insurmountable. The district court listed several alternatives by which the State could lift its flow control laws yet ensure the financial integrity of the local government entities. In particular, the court suggested that the State: (1) issue new bonds to re-finance its in-state solid waste disposal facilities, (2) implement "user charges" for those who use the facilities or a "system benefit charge" to make up for lost funds, (3) issue a statewide solid waste tax (or assessment) on all waste generated in state regardless of where it was sent (in or out of state) for disposal, (4) have the municipalities establish long term contracts with solid waste facilities (assuming, of course, that out-of-state facilities could compete with in-state facilities on an equal footing), or (5) fund the system through a combination of municipal, county, or State "general revenues" (i.e. taxes). Atlantic Coast II, 931 F. Supp. at 351, Para(s) 23.

According to the district court, the State defendants did not shoulder their burden of demonstrating that none of the suggested alternatives could satisfactorily finance -- either individually or through some combination -- their waste disposal needs. Rather, the defendants "merely caricatured each of the tools that may be ...


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