In-state Intuition

A WASTE AUTHORITY REGULATION that controls the in-state movement of waste with no effect on waste transported out-of-state does not interfere with interstate commerce, according to a ruling by a federal appeals court.

Arkansas law created a system for managing solid waste through regional waste management districts. The Northwest Arkansas Regional Solid Waste Management District comprises Carroll, Boone, Marion, Baxter, Newton and Searcy counties.

Under state law, the district adopted rules that allow its governing board to decide on the transfer of waste. The rules state, among other things, that anyone desiring to transfer locally collected solid waste to a disposal site outside the six-county service area must apply for permission to do so. However, no board approval is necessary for any waste destined for out-of-state disposal.

Within the district limits are a privately owned landfill and a transfer station. Both facilities have state permits to accept solid waste.

In 1995, the district approved a request from the transfer station owner, Arkansas Waste Industries (AWI), to haul waste it collected within the district from the transfer station to a landfill owned by Fort Worth, Texas-based IESI Corp. and located in the nearby White River District.

Five years later, IESI purchased the AWI transfer station, assuming the purchase included the authority to transport all waste from the transfer station to its out-of-district landfill.

The district, however, saw the situation differently. It notified IESI that the company had only acquired the rights to haul the waste collected from AWI routes, but not for disposal outside the district.

The district contacted private waste haulers within its jurisdiction, advising them that if they desired to transfer waste to IESI's landfill, they needed a permit from the district. In effect, without such a permit, the haulers would have to deliver the trash to the in-district landfill. None of the haulers applied for such authorization.

IESI filed suit against the district in federal court, alleging discrimination against interstate commerce, unlawful monopoly and tortuous interference with contracts. U.S. District Judge Jimm Larry Hendren found (a) no discrimination — the rule applied only to in-state disposal and did not block access to any out-of-state waste handling facility — and (b) any burden on commerce was minimal. The other claims were deemed to have no legal merit. IESI appealed.

The U.S. Court of Appeals for the Eighth Circuit agreed with the lower court. “The District's regulation does not facially discriminate against interstate commerce … it explicitly exempts solid waste destined for landfills outside of Arkansas,” the appeals court held. “The District's stated purpose for the regulation is to allow it ‘input and decision-making authority regarding the transfer of solid waste into or out of the boundaries of the District’ — a wholly legitimate interest.”

Even if every waste district in Arkansas adopted a similar regulation, Arkansas landfills with out-of-state owners “would actually benefit [from] both local protectionism and the out-of-state exemption,” the appeals court said.

[IESI AR Corporation v. Northwest Arkansas Regional Solid Waste Management District, No. 05-1299, 8th Cir., Jan. 5, 2006]

The columnist is a Rockville, Md., attorney and serves as general counsel of the Solid Waste Association of North America.

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: [email protected].