Designation Rule Upheld

A state solid waste disposal program does not unlawfully interfere with interstate commerce by giving local governments freedom to contract with haulers and landfill operators and to designate in-state landfills for their disposal needs, according to a federal appeals court. [United Waste Systems of Iowa Inc., et al. v. Wilson, No. 98-3594, 8th Cir., Sept. 7, 1999]

Under Iowa law, local governments must file a comprehensive solid waste plan describing, among other things, how and where they will dispose of waste generated within their service area. Cities and counties may freely select their hauling and disposal service providers, and may send some or all of their waste to an out-of-state facility.

If a local government decides to dispose of any waste within Iowa, it must designate and use only one site, which it must name in its plan. A contracted hauler must use the designated landfill. Also, an Iowa landfill may not accept solid waste from a city or county whose plan has not designated that landfill.

A hauler and a landfill operator, both Iowa-based, filed suit in federal district court alleging that the state's waste program illegally interferes with interstate commerce. The hauler claimed that the program destroyed its freedom to choose a disposal site. For its part, the landfill operator objected to restrictions blocking it from handling waste from localities that have not specifically chosen its site. The district judge ruled in favor of the state.

On appeal, the companies argued that the state's system affects interstate commerce because they lost business (by not being hired or designated) which cuts their purchases of goods and services from out-of-state businesses.

"We find this argument barely believable," the appeals court said. "[The plaintiffs'] alleged loss of business stems not from the regulation itself but from the failure to persuade [Iowa] cities and counties ... to do business with them."

Perhaps, as the appellate court noted, the companies were unsuccessful in winning contracts and designations from municipalities because of the "presumptuous and high-handed tone" of the firms' solicitation letters.

The court characterized Iowa's waste program as "an evenhanded regulatory scheme" that does not discriminate against interstate commerce.

Indeed, its effect on commerce "is at most incidental and more likely nonexistent," the opinion said. "[The state] freely permits political subdivisions to send their waste to out-of-state facilities." Moreover, "[c]ities and counties ... are free to renegotiate their landfill contracts and alter their comprehensive plans to designate a different landfill," the court added.

"Tracking and controlling waste are legitimate state policy goals that should not be disturbed simply because two frustrated local companies have failed to convince Iowa's nearby cities and counties to patronize them," the court concluded.

The ruling is noteworthy not merely for upholding intrastate restrictions on waste flow, but for validating - at least in the seven states comprising the 8th Circuit - local government designation of in-state waste disposal facilities apparently without an open, competitive selection process.