Hurdling a Fee System

A waste industry trade association may sue on behalf of its members who claim that a municipal waste generation fee violates the Commerce Clause and the Contracts Clause of the U.S. Constitution, according to a federal district court ruling. [Pennsylvania Independent Waste Haulers Association v. Waste System Authority of Eastern Montgomery County, No. 99-1782, E.D.Pa., March 9, 2000]

In a related case, the same court said that individual waste generators may not legally challenge the fee under the Commerce Clause because they lack a sufficient and recognized stake in the controversy. [George W. Harrison, et al. v. Waste System Authority etc., No. 99-1418, E.D.Pa., March 9, 2000]

The waste authority built an incinerator in the '80s. To help pay for the facility, the authority and area local governments enacted a network of flow control ordinances, assuring a reliable volume of waste that produced needed revenue through tipping fees.

After the U.S. Supreme Court ruled in 1994 that such ordinances unlawfully interfered with interstate commerce, the authority and the municipalities replaced the ordinances with a system where property owners pay an annual waste generation fee, producing enough revenue to keep the facility afloat. Haulers are allowed to dump locally generated waste at the facility at no charge. Unmistakably, the system induces property owners to contract with haulers that use the facility. Otherwise, it would mean paying extra for disposal elsewhere.

The authority directs homeowners and commercial establishments to deduct the fee from their payment obligations under their contracts with private haulers. Waste generators claim that the fee ranges from 17 percent to 300 percent more than what they had paid for waste collection services,according to court documents.

These rulings clear a procedural hurdle for the trade association, which now has an opportunity to prove that the fee system (a) has created indirect geographical restrictions that unlawfully interfere with interstate commerce, (b) has altered or even gutted existing hauler contracts in violation of constitutional protections, and (c) has caused member companies to lose money.

Meanwhile, if plaintiff Harrison can overcome allegations that he no longer owns a waste hauling business, he may proceed with his interstate commerce claim. The court found that his lawsuit satisfactorily alleged that the waste generation fee system had harmed him and that an injunction and/or damages could remedy the situation. However, the district judge blocked Harrison's federal antitrust claims against the authority and Montgomery County. Such entities are immune from damages, the court ruled.

Harrison's co-plaintiffs, who the district judge referred to as "simply waste generators," found themselves legally in the cold. Citing his own decision last year in a similar lawsuit, the judge reiterated his finding that waste generators "are not within the zone of interest of the ... Commerce Clause, for their interests are not marginally related to its underlying purpose."