Woodfeathers, Inc. v. Washington County, Oregon
Brief of Amicus Curiae
ISSUES PRESENTED
These amici, comprising all of the major California recycling industry trade associations and advocacy groups will amplify and supplement the briefs submitted by appellee Woodfeathers, Inc., on the following two issues:
1. Material that is, in fact, recycled, is, in fact, property, as that term is used in Section 601 of the FAAAA. (49 U.S.C. 14501(c)(1))
2. Flow control, including the exclusive franchise ordinance at issue in this case, is unconstitutional under the Commerce Clause.
The federal law and constitutional principles to be applied in this case to the recycling and garbage industries did not evolve in a vacuum. An additional purpose of this amicus brief is to advise the court of the historical genesis of the recycling and garbage industries and how flow control was originally used to combat a health and safety problem. Public policy now dictates that a competitive recycling industry divert recyclables from the waste stream. This brief also describes the present technological, economic and environmental attributes of the recycling industry.
As set forth in the accompanying application for leave to file this brief, California's recycling industry is thriving even though impeded by exclusive franchising, a species of flow control. This industry grosses annual revenue in the billions of dollars and employs thousands of full time workers, while at the same time meeting legislative mandates within California, Oregon, and elsewhere in the Ninth Circuit, to reduce the amount of material disposed by landfill and incineration. The type of local legislation and practice challenged in this action thwarts and impairs the recycling industry from growth and from meeting these state legislatively mandated goals.
SUMMARY OF ARGUMENT
1. If discarded material is recycled in fact, it has value and is property.
2. All recycled material is sold or donated somewhere in the collecting, processing, manufacture, or resale process. Defining a "recyclable" by whether discards are sold by the generator in the collection phase is artificial and wrong.
3. Recyclables enjoy the same, if not better, constitutional protection as solid waste.
4. Local regulation consigning all discards to one collector is just as unconstitutional as local regulation consigning all discards to one disposal facility.
5. Each of these four principles is consistent with:
a. Federal law: 42 U.S.C. §6900 et seq.; 49 U.S.C. § 14501(c)(1) (§601 of FAAAA);
b. Supreme Court precedent: C&A Carbone v. Town of Clarkstown, 114 S. Ct. 1677 (1994); Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dept. of Natural Resources, 504 U.S. 353 (1992); Buck v. Kuykendall, 267 U.S. 307 (1924);
c. Ninth Circuit precedent: Kleenwell Biohazard Waste et al. v. Nelson, 48 F.3d 391 (9 Cir. 1995);
d. Interstate Commerce Commission precedent: Transportation of Waste Products for Reuse and Recycling, 144 M.C.C. 92 (1971);
e. Industry practice and public policy to reduce landfill, incineration, and depletion of virgin resources. 42 U.S.C. §6900; Calif. Public Res. Code §40000.
Before addressing the legal issues, it is important for this Court to appreciate the historical context and industry practices of the recycling and solid waste industries.
THE HISTORY OF THE RECYCLING AND GARBAGE INDUSTRIES IN THE WEST
Almost 150 years ago scientists made a discovery which still holds true today -- mishandled garbage causes disease.
In the mid-1800s, scientists discovered a relationship between putrefying garbage and diseases then rampant, such as cholera and typhoid fever. At that point, garbage collection was rarely a governmental function and was typically the responsibility of individuals. They dumped indiscriminately, sometimes into the streets, adding to the manure that horses dropped, or into open dumps that cities designated. These dumps were often in wetlands or in or next to waterways. For example large areas of the San Francisco Bay shoreline were used as dumps. The waste on the street and in dumps usually went uncovered, so it attracted various vectors that, in turn, transmitted disease.
After the connection between waste and disease was made, municipalities around the nation passed public health laws and established health commissions to work on the problem. The commissions worked with newly established public works departments and people in the emerging engineering profession to set up municipal programs that swept the streets of both garbage and manure and emptied garbage cans behind people's houses. Generally the waste was taken to the same open dump as before, but at least it moved the health hazard reliably off the streets. Occasionally the material in the dump was burned to conserve space.
This is the genesis of the still-close association between street cleaning, water, engineering, and public works departments.
By the end of the nineteenth century, many municipalities had such "municipal housekeeping" programs. They were popularly supported by active community members, especially by the women's movement.
This social visibility and popularity was accompanied by technological competition for the resources. There was a thriving trade in the acquisition and resale of unwanted food, which was collected separately and fed to hogs. Collection methods and frequencies varied from place to place, with some cities preferring combined and others separated collection for different materials.
The underlying rationale of municipal collection of solid waste was to protect public health and safety, and municipalities called on their police powers to ensure their capability to provide the protection. They administered the collection and disposal system using either city staff of franchises. One type of franchise provided exclusive access to the materials.
But the recovery industries declined in the Great Depression, when discards diminished. Then in World War II, it became a patriotic duty and public obsession to avoid wasting any useful materials. People cooked from their victory gardens, composted at home, and saved string to be used again, bottles to be refilled, cans to be detinned, and even soap chips to be melded together. Men who collected garbage on weekdays spent weekends collecting separated materials for what today we would call recycling.
In the late 1940s and 1950s, a war-weary public embraced the consumer production system that emphasized convenience and consumption. By then, the two technologies of modern solid waste had been developed; the compactor truck and the sanitary landfill. The compactor truck permitted cities and their franchisees to discharge their public health responsibilities with a collection system that minimized labor, and the landfills received all materials without regard for recovery.
But the mechanisms of the compactor truck made it too dangerous to continue the collectors' traditional practice of scavenging salable materials from what they collected. The landfills filled up very quickly.
Between the 1950s and 1970 there was little popular interest in recycling or reclaiming discarded materials, and the population at large was happy to keep garbage out of sight and out of mind. Virgin resources were considered abundant and the toxicity of landfills and incineration was relatively unquantified and unrevealed.
Beginning with Earth Day in 1970, however -- nearly three decades ago -- the slogan "Reduce, Reuse, Recycle" marked a public reawakening. Sanitation was no longer enough. Public activism opposed mixed-waste incineration and landfills, and promoted recycling.
This was the cultural mandate that led to legislative initiatives such as California's AB 939, which established a goal of reducing the waste stream by 50%, and Oregon's Recycling Opportunity Act. Century-old industries formerly called the rag trade and scrap metals salvagers gained new identities as recyclers and new businesses found new niches and segments of the materials flow to develop.
Today, three things are beyond dispute:
1. Landfills and incinerators cause disease, which is partly why states such as Oregon and California have mandated reduction in landfill disposal. Calif. Public Resources Code §40000; O.R.S. §459.015.
2. Using recycled feedstock reduces depletion of virgin resources, which is the other reason for mandated waste reduction.
3. All discarded material is "recyclable" in theory. Whether or not material is recycled, in fact, depends upon reclamation cost and end use market. The recycling industry typically is not publicly subsidized.
Today, garbage haulers know that current technology provides a recycling option and a profit for a wide variety of non-putrescible material. Todays garbage haulers use the traditional health and safety justification for franchising the collection of garbage as an excuse to monopolize the collection of valuable commodities that are inert, benign, and pose no health and safety risk.
It is in this light that this Court must scrutinize whether recyclables are property under federal law and whether the traditional police power whose purpose is to protect the public health and safety has any present constitutional application to the collection of recyclable material.
This brief advocates treating recyclables differently from solid waste, consistent with federal law. The method of distinguishing "recyclables" from "solid waste" before applying applicable federal and constitutional law may be the most important issue for this Court to decide.
RECYCLABLES ARE NOT SOLID WASTE
A. What is a "recyclable"?
In today's technology, all discarded material in theory is "recyclable". That is, practically every single type of material is amenable to some reclamation process. The three reclamation processes are generally described as:
Reuse: which accepts an object as-is (as is done by Salvation Army or Goodwill) and may clean or repair it before finding another user who will accept the object in its manufactured form. This process conserves both the natural resource and the economic value that was added by manufacturing.
Recycling: which entails some level of sorting and processing objects for the value of their commodities, for the purpose of recovering the resource and using it to produce a new product (such as recycling an aluminum can into a new aluminum can).
Composting: which is a type of recycling process for carbon-based materials such as plant debris, soiled paper, or putrescibles that processes commodities under controlled conditions of biological or chemical decomposition to produce a soil product.
In California, recycling is defined by statute as a process which takes material before the material ever becomes solid waste. "Solid waste" results from the failure of these reclamation processes.
California Public Resource Code §40190, defines "recycling" as the process of:
". . . collecting, sorting, cleansing, treating, and reconstituting materials that would otherwise become solid waste, and returning them to the economic mainstream in the form of raw material for new, reused, or reconstituted products which meet the quality standards necessary to be used in the marketplace . . .".
In Oregon, "recyclable material" means:
". . . any material or group of materials that can be collected and sold for recycling at a net cost equal to or less than the cost of collection and disposal of the same material." O.R.S. §449.005(19).
Under Oregon regulations, savings to the generator because of lower collection costs for recycling is equal to selling the material for recycling for purposes of defining materials as "recycled". OAR §340-090-0140(2)
In California, local agencies are required to implement a priority of first, source reduction, second, recycling and composting, and last, transformation (incineration) and landfill disposal. Public Resources Code §40051.
B. What is Recycled, in Fact
In both California and Oregon, local agencies are required to prepare and implement integrated waste management plans that include, as a component, a characterization of the constituent materials discarded within the City or County. Calif. Public Resource Code §41030; O.R.S. §459.015.
The following reflects a typical list of constituent materials, together with some of the many recycling processes and end-use markets currently in use and available.
Paper & Cardboard: By weight this is the largest component of the discard stream. There are at least 83 grades of recycled paper determined by the fiber length and quality of the collected paper (computer paper the most desirable and newspaper and mixed paper the least), and the amount, if any, of contaminants (ink, food, etc.). High grade paper is sold to paper mills as a pulp substitute, lesser grades are used for newsprint, tissue, napkins, boxboard, containerboard and liners, building products and wallboard, roofing paper and spray-on insulation.
Glass: Almost all recycled glass is used to produce new glass containers and bottles. Low grade material (mixed clear, green, and amber cullet) is used in paving material and other building and masonry materials.
Aluminum cans: With the prevalence of community recycling programs, very few aluminum cans go to landfill. Since the U.S. must import all aluminum, aluminum manufacturers have actively promoted recycling aluminum cans to develop a domestic supply of feedstock.
Plastics: In contrast, plastics recycling suffers by comparatively low cost of virgin material, political defeat of recycled content legislation for plastic food and cosmetic packaging, and technical difficulties in sorting plastic objects that fall within a single polymer category but require different processing. Yet many types of plastic (especially PET, HDPE, LDPE) are recycled and processed for carpet backing and fiber, polyester fiber, molded products, detergent bottles, motor oil containers, and film products such as trash bags.
Metals: Virtually all metals collected are in fact recycled. Steel and tin scrap and copper wire are recycled to extract the tin, steel, and copper components. The uses of recycled copper, lead, nickel, zinc, tin, and steel is extensive and includes building material, automobile parts, outdoor furniture, electronics, solder, corrosion-resistant alloys, coatings, plating, and galvanized products.
White goods: This term refers generally to appliances. If not reused, appliances are dismantled by first removing the motors and compressors and then shredding the bodies for recycling as scrap metal.
Food & yard debris: These materials are easily composted, used for mulch, or landfill cover or made into biomass fuel. Recyclers consider using yard debris as landfill cover or biomass fuel as far less conserving recovery methods than composting, although they may use them if no composting or better facility has been constructed in an area. They reason that when the compost system becomes available, the clean resource flow will be ready. Until then, burning homogeneous biomass is far preferable to burning mixed garbage because emissions are relatively easy to control and are less hazardous. As one example of a far preferable recovery method, Von's market consigns its organic discards to a company that composts it and then packages the compost for retail sale by Von's.
Used wood: Nails and other metals are removed and the prepared wood is used for framing or form lumber, particleboard, insulation, or biomass fuel depending on the amount of contaminants such as lead, asbestos, paint and wallpaper. This is what appellee Woodfeathers does with its wood roofing shingles.
Asphalt & concrete: These ceramics are crushed and recycled as roadbase, mixed with fresh asphalt to make new paving material, or used as a substitute for gravel aggregate in new concrete. A good asphalt and concrete recycler/processor will recycle and resell 99% of all material collected.
Gypsum/wallboard: Emerging technology provides the means to separate the paper and other contaminants from the gypsum which is crushed and recycled as new drywall or for agricultural uses.
Rubber/tires: Rubber and especially tires have traditionally been considered difficult to recycle, but new processes permit them to be combined with asphalt for playgrounds and other paving products, ground to produce crumb rubber for new tires, gaskets, belts, and floor mats, or burned as separated high-BTU fuel.
Oil: Used oil is highly regulated and over 60% of what is collected is recovered as fuel.
C. According to the ICC, recyclables have value
Since today's recycling technology is dramatically different from technology available in 1965, the primary ICC case cited by appellant is outdated and irrelevant. Joray Trucking Corp., 99 M.C.C. 109 (1965).
In contrast, the 1971 Commission decision in Transportation of Waste Products for Reuse and Recycling, 144 M.C.C. 92 (1971) begins the modern trend to recognize recyclables as valuable property.
The Commission distinguished Joray by the fact that in Joray, garbage was transported to landfill and used as fill whereas in Reuse & Recycling, material was recycled. The Commission held that the fact that a manufacturer was willing to pay for recycled feedstock made the material "property" and subject to Commission regulation:
"It is therefore plain, we think, that waste materials purchased for use in recycling programs, such as those conducted by manufacturers of glass containers and cans, assume all of the characteristics of "property", . . . and, as such, their transportation is subject to full economic regulation by us." (citation omitted)
All material that is recycled, in fact, is sold or donated somewhere in the recycling process. Even material that is collected for a fee from the generator is either sold or donated as feedstock after it has been processed by the recycler or sold or donated in a retail market after manufacture of the feedstock (i.e. compost). The Commission's determination that sale determines regulatory control of "property" doesn't require that sale be by the generator, only that a sale occur somewhere in the process of reclaiming the material.
This Commission decision is consistent with the position of these amici and the District Court's determination that "property" under the FAAAA is what is recycled in fact.
D. Who Recycles, In Fact
It is indisputable that independent recyclers, in fact, recycle a much higher percentage of material they collect than do exclusively franchised garbage haulers. The reasons are likewise indisputable:
1. Franchised garbage collectors are subsidized. Their disposal costs and other expenses are already passed through to the ratepayers. The franchisee typically receives guaranteed profit and return on investment. Thus, garbage companies have less incentive to reduce expenses by recycling and thereby avoid landfill or other disposal costs. Independent recyclers do not enjoy this subsidy. A failure to recover material collected by a recycler results in residue that must be disposed of at landfill and every dime spent to dispose of waste at landfill is a dime less profit to recyclers.
2. Garbage companies largely collect and compact mixed material (using the packer trucks) that contain putrescibles. When other types of recyclables, such as glass, paper, plastic, and cans are mixed and compacted with putrescibles it is much more difficult and expensive to reclaim the recyclables. The material recovered is generally of poorer quality so that it is less marketable. In other words, "garbage in, garbage out".
E. So, How Do You Define "Recyclable" in Contrast to "Solid Waste"
The dividing line between "recyclables" and "solid waste" is not obvious. When eyeballing any particular bin, you can only tell in hindsight whether a load was recycled in fact or not. A load of discarded food is "recyclable" in theory by composting unless it's dumped at a landfill -- then it's waste. A load of valuable computer white ledger paper is "solid waste" if landfilled and not recycled. A mixed material load is wholly or partly recyclable or solid waste only after it's collected, sorted and processed.
There are currently at least seven places to mark the dividing line between recyclables and solid waste exist which are discussed below. Only the first three are practical.
1. A recyclable must be identified in hindsight by the result of the reclamation process. If the material is, in fact, recycled then, the material must have been "recyclable". If the material went to a landfill it became solid waste. This approach was used by the District Court. Using this approach also makes the application of preemption easy -- something that in fact is recycled is property under 601 of the FAAAA.
2. A recyclable results from a handling decision usually made by the generator.
A. If the generator places its discards in a solid waste receptacle, the material becomes part of the solid waste stream and are handled by the solid waste handling service, the garbage company. The garbage company may elect to reverse the generators decision by recovering and recycling some materials.
B. If the generator places its discards in a designated collection location in a container segregated from the solid waste stream and designated for the authorized recycling agent, it is handled by the authorized recycling agent of the city and county. (Calif. Public Resources Code §41950).
C. If the generator does not place the discards in the solid waste receptacle or in the segregated collection location for the authorized recycling agent, he, she, or it may affirmatively contract with anyone else for the collection and recovery of such valuable commodities. (O.R.S. §459A.080; Calif. Public Resources Code §41952)
3. Use of the term "refuse" to define solid waste.
During the evolution of franchised garbage collection, the terms "garbage", "waste", and "refuse" were used interchangeably. Today's "solid waste" is the gentrified term.
Nevada, as an example, still defines "solid waste" as "refuse". N.R.S. §444.490.
"Refuse" according to Webster's New Collegiate Dictionary (1976) is "the worthless or useless part of something: leavings, trash, garbage. As an adjective, "refuse" is "thrown aside or left as worthless".
Materials that are recycled are not worthless or thrown aside. An end use market pays money to a processor who collected the material or manufacturer who sells the refined product at wholesale or retail. Recyclables are not "leavings".
4. The Oregon Rule
As stated supra at p. 8, Oregon defines a "recyclable material" by economics. If the cost of collecting material that is sold for recycling is equal to or less than the cost of collecting and landfilling the same material, the material is "recyclable". O.R.S. §449.005(19).
This definition installs economic terms to define a technological process. Sometimes the two harmonize and other times they do not.
The two are made harmonious by Oregon regulations which define recycling to include cost avoidance to the generator by a lower collection and disposal charge for recyclables than for landfill. OAR § 340-090-0140(2).
But the disharmony and flaw in this definition is also illustrated by the options available to collectors in Appellant Washington County, Oregon.
The record reveals that collectors of recyclable material had disposal choices of (1) a processor who recycles but charges a tipping fee of $52/ton, and a (2) landfill that charges a tipping fee of $28/ton for interstate loads. (Appellants brief p. 13.)
If processing costs for a particular recyclable are high or the end use market resale price is low (or both) and there are multiple competing landfills in one locality, then it may cost less for a collector to dump than to recycle.
The generator who wants to recycle and the collector who wants to recycle this low value material can agree to pay a higher collection fee that offsets the higher recycling cost a practice currently hindered in California. (See infra p. 19)
Permitting this practice of paying more to recycle promotes recycling for these low value materials, which otherwise and unnecessarily go to landfill.
The better test and the more enforceable test is whether the material is or is not, in fact, recycled.
5. A recyclable cannot operably be identified by whether the generator pays someone to take away the material (the so-called "fee for service" distinction).
This was the test used by the California Supreme Court in Waste Management of the Desert v. Palm Springs Recycling Center, 7 Cal. 4th 478, 490 (1994), and is offered by appellant and its amici for its persuasive authority. The California Supreme Court's approach was not the focus of any of the briefing before that court and it is inoperable in practice. The Court's approach fails to account for the large volume of material that can and will be collected and recycled by independent recyclers, but which lack inherent value sufficient enough to cover the processing costs so that the recycler can't collect it without charge.
Whether material is recycled, in fact, depends upon the cost to acquire and process the material (or to haul the material to a processor) and the resale price of the feedstock. Materials such as yard debris or low grade mixed residential, or most plastics don't command a high enough end use price to justify paying money to acquire the material. In these cases, the material would have a negative value to any collector whose costs are higher than the revenues from selling materials. Yet independent recyclers who are not subsidized and are cost-conscious will collect negative-value material, providing their work is justified by revenue from collection fees and from resale combining to offset costs. This practice permits a recycler to adapt to fluctuating markets for recycled materials.
Differentiating recyclables from solid waste by using a "fee for service" test artificially shifts material that would otherwise be recyclable into the solid waste category so that only the monopoly exclusive franchisee may process it and reap the profit. This approach would define an independent recycler out of business in a low market.
6. Washington County defines a recyclable contrary to current policy and technology
Appellant defines "waste" (the scope of its ordinance) as "material that is no longer usable or wanted by the source of the material, which material is to be utilized or disposed by another person". §8.04.020(Q).
To apply the California Supreme Courts terminology to this ordinance, all material, whether "discarded" or "disposed" by the generator, is waste. This is completely contrary to current public policy and technology.
Washington Countys ordinance is at variance with Oregon state law and regulations defining recyclable materials.
7. A recyclable cannot be identified by subjective terms
Appellant is correct that terms like those used by the District Court such as "industrial context" or "collected for the purpose of recycling" (Appellant's brief p. 46-47) are subjective. Refinement, consistent with the District Court's intent is easy. Woodfeathers is not involved in residential or curbside collection. Permitting the collection of all non-residential, non-curbside discards (e.g. commercial and industrial) by ICC carriers which are recycled in fact is what the District Court had in mind.
Again, a standard reflecting whether something is recycled, in fact, or not serves the purpose of an objective, definable, enforceable, standard.
8. Conclusion
These amici urge this Court to adopt a dividing line between "recyclable" and "waste" that furthers the legislative mandates to promote recycling, is consistent with federal law and constitutional principles, and is capable of enforcement without subjective analysis or reference to market fluctuations.
The simples definition intellectually and practically is: if something is recycled, it must have been recyclable.
THE COMMERCE CLAUSE AS APPLIED TO RECYCLABLES AND GARBAGE
A. Supreme Court and Ninth Circuit Precedent
In applying Supreme Court and Ninth Circuit precedent, as well as decisions from other Circuits, there are two key points:
1. "Waste" is an article of commerce which receives constitutional protection because of the competition for waste among the operators of different landfills or incinerators. Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dept. of National Resources, 504 U.S. 353, 359 (1992). Local regulation cannot discriminate against out of state "waste". Fort Gratiot at p. 359. If local regulation discriminates against and impacts interstate commerce of recyclables, which have a resale and reuse market, recyclables as products should enjoy at least the same constitutional protection given "waste".
Even hazardous waste is an article of commerce enjoying constitutional protection from interstate interference by local government. National Solid Waste Management Association v. Alabama Dept. of Environmental Management, 910 F.2d 713 (11 Cir. 1990) cert den. 501 U.S. 1206; Chemical Waste Management, Inc. v. Templet, 967 F.2d 1058 (5 Cir. 1992) cert den. 506 U.S. 1080.
2. Both recyclables and waste are processed first by collection and then by disposal, either through reuse, recycling or landfilling. If local regulation commanding that all material be disposed of at one location to one receiving company is unconstitutional (C&A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383 (1994)), then so too must local regulation that requires in fact or in practice that recyclables be collected by one entity (an exclusive franchise system).
This Court has suggested that collection of and disposal of solid waste be given less constitutional protection than recyclables or other property so that marking the dividing line first is important. (Infra p. 25)
B. The Scope and Purpose of the Commerce Clause
For more than 150 years, federal courts have invoked the Commerce Clause to scrutinize state regulations affecting interstate commerce, even in the absence of conflicting congressional legislation. SSC Corp. v. Town of Smithtown, 66 F.3d 502, 509 (2 Cir. 1995).
As noted by the Court in SSC Corp. in applying the dormant Commerce Clause, courts have identified guiding principles -- limiting "protectionist" state legislation and fostering the development of a unified national market -- that presumably motivated the Founders to endow Congress with the affirmative power to regulate commerce. The Supreme Court expressed this principle in H. P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 539 (1949) as follows:
"Our system, fostered by the Commerce Clause, is that every farmer and every craftsman shall be encouraged to produce by the certainty that he will have free access to every market in the nation, that no home embargoes will withhold his exports, and no foreign state will by customs, duties, or regulations, exclude them. Likewise, every consumer may look to the free competition from every producing area in the Nation to protect him from exploitation by any. Such was the vision of the Founders; such has been the doctrine of this court which has given it reality."
Accordingly, state regulations that discriminate against interstate commerce are subject to a per se rule of invalidity. City of Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978). "Discrimination" means differential treatment of in-state and out of state economic interests that benefits the former and burdens the latter. Oregon Waste Systems, Inc. v. Department of Environmental Quality, 511 U.S. 93 (1994). In Oregon Waste, the Supreme Court "easily" held a landfill surcharge on out of state waste to be unconstitutional.
According to this Court in Kleenwell Biohazard Waste et al. v. Nelson, 48 F.3d 391, 395 (9 Cir. 1995):
"The Supreme Court has distinguished between two types of state regulations burdening interstate commerce: (1) those that directly burden interstate commerce or discriminate against out-of-state interests and, (2) those that burden interstate transactions only incidentally. Regulations that fall into the first category are generally struck down unless the state can demonstrate that legitimate local interests unrelated to economic protection is served by the regulation and no less discriminatory alternative exists (citations omitted) while those in the second are subjected to the Pike balancing test (see Pike v. Bruce Church, 397 U.S. 137 (1970)) (remaining citation omitted)."
Even a discriminatory impact on intrastate commerce will trigger Commerce Clause scrutiny. Fort Gratiot, supra; In re: Southeast Arkansas Landfill, Inc., 981 F.2d 372 (8 Cir. 1992); GSW, Inc. v. Long County, GA, 999 F.2d 1508 (11 Cir. 1993); Ben Oehrleins Son & Daughter, Inc. v. Hennepin Co., 115 F.3d 1372 (8 Cir. 1997).
Plaintiff and appellee Woodfeathers is a small part of a very large industry which is burdened and impacted by discriminatory local legislation of the type enacted by appellant Washington County. Woodfeathers provides a drop box service to roofing contractors who separate the wood shingles and asphalt which Woodfeathers transports and delivers to companies that process them. In the case of the wood shingles, this means extracting the nails and other contaminants, and then grinding the wood for sale as raw material for particle board or as biomass fuel. Appellant asserts that Woodfeathers doesn't recycle much.
These amici advocate making actual recycling the test for higher Commerce Clause protection and for FAAAA preemption so that to the extent that Woodfeathers doesn't recycle, it gets less constitutional protection. If this Court adopts this test, Woodfeathers must hone its practice to conform to this Courts determination.
Woodfeathers is not the only company impacted by the Washington County legislation. There are many thousands of businesses within the Ninth Circuit impacted by identical legislation where the right to collect property (recyclables) is conferred and franchised by local government to one local company in a discriminatory fashion.
C. Strict Scrutiny, Pike Balancing and the application of Kleenwell
The first question in Commerce Clause analysis is what test to apply, strict scrutiny or a Pike balancing test. In making this decision, this Court in Kleenwell focused on exactly what is now the issue in this case, whether the material was solid waste or property.
As the Court noted in Kleenwell, Congress has found that the field of solid waste collection is primarily the function of state regulation. (42 U.S.C. §6901(a)(4)) and that a state's power to regulate commerce is at its zenith in areas traditionally of local concern. Kleenwell at p. 398 citing Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 350 (1977).
Because of the historical role of government in regulating unsanitary disposal of waste, solid waste collection long has been considered traditionally a local concern. California Reduction Co. v. Sanitary Reduction Work, 199 U.S. 306 (1905).
In Kleenwell, Kleenwell was a Washington corporation with facilities only in Washington that operated a medical waste collection and disposal service. In California and Oregon, medical waste is highly regulated separately from solid waste (O.R.S. §§459.005, 459.386 et seq.; Calif. Public Resources Code §40191(c)) and almost invariably is not recycled. This Court's opinion in Kleenwell does not reveal the ultimate disposition of the medical waste Kleenwell collected except to note that Kleenwell transported this "waste" to California for disposal. (op. at p. 393)
Kleenwell was denied a "certificate of public convenience" by the Washington Utilities and Transportation Commission under a statute requiring all carriers that collect, haul, and transport solid waste to obtain such a certificate. Kleenwell contended that the WUTC could not constitutionally require Kleenwell to obtain such a certificate because "the transportation in question is interstate in nature".
This Court's rejection of this broad assertion is consistent with §601 of the FAAAA, which permits local agencies to adopt health and safety regulations governing interstate carriers while it preempts outright collection bans.
This Court noted that Kleenwell did not contend that the state's refusal to grant it a permit was improper or that the regulation was invalid. Instead, Kleenwell argued entirely upon its belief that a state may not impose a certification requirement upon a waste disposal firm engaged in interstate commerce. The Court's opinion is explicitly limited to the general structure and purpose of the state's regulatory scheme and not whether the specifics of its operation would withstand constitutional scrutiny. (op. p. 399)
In Kleenwell, this Court did not have before it a local regulation commanding in application that material either be collected by one company or disposed of by one company, the twin prongs of flow control.
Unlike Woodfeathers in this case, or Medigen in the Fourth Circuit, Kleenwell, or any in-state or out-of-state carrier, could obtain a certificate of public convenience. In this case, the District Court found that Woodfeathers could not obtain a permit from Washington County.
Thus, Kleenwell cannot be applied to this case as precedent. But some of the Kleenwell dicta is instructive.
The choice by the Kleenwell court of whether to use strict scrutiny or Pike balancing was governed by the following factors: (op. p. 398)
"Moreover, this regulation suffers from none of the infirmities that plagued the regulations and statutes invalidated under the Buck line of cases. The regulation does not discriminate against out-of-state interests; in-state and out-of-state firms may both obtain certificates under the regulations. Compare C & A Carbone, Inc. v. Town of Clarkstown, 114 S. Ct. 1677, 1683 (1994) (noting that "the essential vice in laws [that discriminate against interstate commerce] is that they bar the import of the processing service") with South Carolina State Highway Dep't. v. Barnwell Bros., 303 U.S. 177, 187 (1938) (noting that "the fact that [the regulations] affect alike shippers in interstate and intrastate commerce in large numbers within as well as without the state is a safeguard against their abuse") and Hass v. Oregon State Bar, 883 F.2d 1453, 1462-64 (9th Cir. 1989) (upholding a statute because "all providers -- whether local or out-of-state -- are equally disadvantaged vis a vis the Bar"), cert. denied, 494 U.S. 1081 (1990). In addition, the regulations do not prevent or discourage a firm that has obtained a certificate from processing waste out-of-state, nor do they make doing business in the state of Washington more costly for out-of-state companies relative to in-state firms. Compare C & A Carbone, Inc., 114 S. Ct. at 1682 (striking down a statute because "it allows only the favored [local] operator to process waste that is within the limits of the town") and Hunt, 432 U.S. at 350-51 (striking down a regulation because it made the cost of doing business greater for out-of-state companies than for in-state companies) with Exxon Corp., 437 U.S. at 126 (holding that a regulation is valid because it "creates no barriers whatsoever against interstate [companies]; it does not prohibit the flow of interstate goods, place added costs upon the, or distinguish between in-state and out-of-state companies in the retail market"). For these reasons, we analyze the constitutionality of the regulation under the Pike balancing test. See Oregon Waste Systems, Inc. v. Department of Environ. Quality of the State of Oregon, 114 S. Ct. 1345, 1350 (1994)."
To apply these factors:
1. Washington County "bars the import of the processing service"
Washington County, by its exclusive franchise system, "bars the import of the processing service" and thereby creates a monopoly on the collection of valuable recyclable commodities. If one company collects all of the recyclables (material that does not go to landfill) such monopoly drives up the acquisition cost for processors of the recyclable materials and the end use buyers of the recycled feedstock. In effect, to paraphrase Carbone, exclusive franchises allow only the favored local operator to collect and process material that is within the limits of the franchise. By monopolizing the capture of the recyclable feed stock, out of state access to the flow of such goods is blocked and the in-state monopoly has competitive advantage over the out of state collector, processor, or end use market. This presents a barrier to interstate commerce not present in Kleenwell where all carriers could obtain a permit and transport waste out of state.
2. Washington County discriminates in fact
The District Court found that the permit process applied by Washington County did discriminate against out of state interests whereas Kleenwell never asserted that the WUTC process was unfair in application.
3. Distinguishing "recyclables" from "solid waste" is consistent with federal law
The Kleenwell Court found its ruling to be in harmony with federal law regarding solid waste collection whereas Congress, in enacting the FAAAA in 1995, specifically preempted local regulation banning the transportation of property by ICC permit holders.
Appellant and its amici have also referenced the provisions of the Resource Recovery Act of 1970 as they amended the Solid Waste Disposal Act, 42 U.S.C. §6900 et seq.
Section 6901(b) of the Act states congressional findings that "land is too valuable a natural resource to be needlessly polluted by discarded materials, most of solid waste is disposed of on land in open dumps and sanitary landfills" " that disposal of solid waste . . . on the land without careful planning . . . can present a danger to human health and the environment"; that "a reliance on land disposal should be minimized"; that "alternatives to existing methods of land disposal must be developed"; and that "millions of tons of recovered material which could be used are needlessly buried each year."
In this context, §6903(27) defines "solid waste" as ". . . any garbage, refuse, sludge from a waste treatment plant . . . and other discarded material."
From this language, different courts have been asked to determine whether recycled material which is diverted already from landfill could be part of the "solid waste problem" addressed by Congress which was concerned about dumping, with different results.
In U.S. v. Wedzeb Ent., 844 F. Supp. 1328, 1337 (S.D. Ind. 1994) the Court found that recycling or reuse of PCB-filled capacitors was not disposal of solid waste under the Act. Similarly, in American Mining Congress v. U.S. E. P. A., 824 F.2d 1177 (D.C. Cir. 1987), the Court found that material must be abandoned as worthless (i.e. refuse or garbage) before it is solid waste.
But in both U.S. v. ILCO, Inc., 996 F.2d 1126 (11 Cir. 1993) (recycled batteries) and Owen Electric Shell Co. of S. Carolina v. Browner, 37 F.3d 146, 149 (4 Cir. 1994) (recycled slag) the Courts found that material that was disposed for recycling is solid waste under the Act. Both of these cases involved the reach of a regulator, EPA.
If this Court reaches the issue of what is solid waste under this Act, it should scrutinize whether recyclables, if they are defined as materials that are recycled, and never go to landfill, could possibly be part of a landfill disposal problem that needs regulation under the Act.
4. Washington County imposes an industry-wide "barrier to market"
The barriers to the market in Kleenwell were only to Kleenwell. In this case, the barrier to market on the issues framed are industry-wide.
If solid waste collection is the zenith of local government's ability to intrude into interstate affairs, the nadir, as found by Congress (in the FAAAA) is the intrusion into commerce for the collection, sorting, processing, and resale of valuable property.
This point is echoed by this Court in Citizens for Responsible Government v. Washoe County, 110 F.3d 699, 704 (9 Cir. 1997). Although this Court's holding primarily was that the generator/plaintiffs lacked standing because they had not suffered Commerce Clause injury, the Court also addressed a "takings" challenge to a curbside recycling program by stating:
"Independent Sanitation's curbside recycling service cannot be considered a "taking" of recyclable materials because residents have no obligation to utilize that service. Residents can legally choose to deliver their recyclable materials to recycling centers or not recycle at all."
This is the exact choice which should be available to the customers of Woodfeathers and all those similar situated.
5. Buck is factually on point.
This Court in Kleenwell distinguished its facts from Buck v. Kuykendall, 267 U.S. 307, 313 (1924). But the facts in Buck are analytically on point to this case.
In Buck, the Court (opinion by Justice Brandeis) held that a local certification requirement for transportation of persons between Oregon and Washington was per se unconstitutional. The Court made no especial distinction between transporting persons and transporting property, the impeding local regulation in this case.
This Court should apply strict scrutiny to Washington County's exclusive franchise ordinance and find it unconstitutional because Washington County could achieve legitimate health and safety goals by other than an outright collection ban on the collection of recyclables.
Before applying strict scrutiny to the facts of this case or addressing why this legislation is unconstitutional even under Pike, these amici return to the issue of "negative value" materials which are in fact recycled and the California Supreme Court's construction of California statutes on this issue, since this case was cited at length by appellant and its amici.
THE CALIFORNIA SUPREME COURT ERRED
IN USING THE SO-CALLED "FEE FOR SERVICE"
DIVIDING LINE BETWEEN RECYCLABLE AND SOLID WASTE
None of the briefing by the parties before the California Supreme Court suggested that the Court define "solid waste" by whether the generator was paying someone to collect the material or not. Two amici, CRRC and the Independent Recyclers Association touched on the issue in less than a total of one page of text. The Commerce Clause was not raised as an issue.
The issue before the Court was whether local government could grant an exclusive franchise for the collection of "recyclables" under state law. The California Supreme Court ruled that local government could not grant an exclusive franchise for collection of recyclables because the state legislature had commanded that the maximum permissible scope of an exclusive franchise was to collect "solid waste".
While the briefing before the Court articulated different means to distinguish "recyclables" from "solid waste" under California state law, the "fee for service" dividing line was not the focus in the briefs.
For this reason, and since California's interpretation is not precedent in this case, these amici request that this Court give a fresh look at the appropriate place to draw the line and to consider the following legal reasons why the California Court's interpretation was wrong.
Calif. Public Resources Code §40059(a)(2) contains the power of a local agency to grant an exclusive franchise stating that such a franchise may be granted, either with or without competitive bidding if:
". . . in the opinion of its governing body, the public health, safety, and well-being so require, by partially exclusive or wholly exclusive franchise . . ."
In Waste Management of the Desert v. Palm Springs Recycling Center, 7 Cal. 4th 478, 484 (1994), the Supreme Court held that this section allows a city to grant an exclusive franchise for "solid waste handling services".
"Solid waste handling" is defined by §40195 to mean the collection, transportation, storage, transfer, or processing of solid wastes.
§40191(a) defines solid waste to mean:
"All putrescible and non-putrescible solid, semi-solid, and liquid wastes, including garbage, trash, refuse, paper, rubbish, ashes, industrial waste, demolition and construction wastes, abandoned vehicles and parts thereof, discarded home and industrial appliances, dewatered, treated, or chemically fixed sewage sludge which is not hazardous waste, manure, vegetable, or animal solid and semi-solid wastes, and other discarded solid and semi-solid waste."
The Supreme Court in Palm Springs recognized that: (1) the statutory definition of solid waste "further supports the view that valuable recyclables that have not been discarded are not waste"; (2) "the fundamental purpose of the Act is to reduce the amount of material entering the waste stream." (op. p. 485, 488)
The Palm Springs court then sought to draw the dividing line between "recyclable" and "solid waste" for purposes of establishing the maximum permissible scope of an exclusive franchise under §40059(a)(2).
The Court held in Palm Springs that material which is "discarded", a term used in §40191, is solid waste and material that is "disposed" for compensation is not solid waste and that the maximum permissible exclusive solid waste franchise covers only materials that are discarded. (op. p. 486-88)
The Court defined "discard" to mean "throw away", under the American Heritage Dictionary definition of the term, which also makes it synonymous with "reject". The Court used this term "discard" to define material that is "solid waste" and defined the line between "discarded" and "non-discarded" material as the fee for service. If the owner/generator sells or gives away the material, it is "disposing" of the material, not discarding it, and therefore the material is not solid waste, so the material cannot be the basis of an exclusive franchise. (In other words, free, open competition to collect "disposed" items is required under California state law.)
These amici agree with the Court that the terms "discard" and "value" are intrinsically related. But the Court's creative and unique usage of "discard" has left some questions open. To harmonize the intentions of the Court and the Act, this further refinement is necessary: to answer the questions "value to whom?" and "when is value established?"
The question "value to whom" is raised by implication in the term "discard" itself, which the American Heritage Dictionary (1981) defines as meaning "to throw away; reject; dismiss". To "throw away", in turn, means "to discard as useless" or to "fail to use". The implication of "away" is to remove a thing from the presence of the generator; no destination of destiny is specified in the common usage. Even if the generator finds a thing to be useless, the recycling industry may find otherwise. In fact, some members of the reuse and recycling industries use "discards" as a term of art to refer to materials they receive and process, even if they have purchased the materials.
Furthermore, the value may be determined not only at collection, but at other points in the materials-handling and production process.
Oregon regulations recognize that a collection fee may be charged where the material is disposed of to a recycler at less cost than landfill disposal. OAR §340-090-0140.
Because it was not squarely presented to the Court in Palm Springs, the Court was not fully apprised that there are a vast quantity of materials which are, in fact, "recycled" and therefore not "waste" but which, at times, cannot be sold by the owner because of the volatile fluctuation of market conditions (i.e. yard debris, plastics, mixed paper, some construction debris).
The recycling industry will divert these materials from landfill (the express goal of California's legislature) by sorting, upgrading, composting, or reconstituting these materials. The recycling industry will gladly collect these recyclable materials from the owner at a much lower cost if possible than the waste hauler because the recycler profits from sale to the end-user. The owner typically benefits economically by paying less for disposal than if it used the franchised waste hauler. Reducing costs is a value to the owner/generator.
In some cases of very low value material (i.e. tires) the owner/generator may desire to see the material recycled and will be willing to pay a higher collection fee to a recycler than a franchised hauler would charge simply because the recycling processing costs are higher than a competitive landfill disposal fee.
The express purpose of California's recycling law ("AB 939") was to comprehensively "revise, recast, and update current solid waste management laws including repealing obsolete statutes and upgrading updated definitions". (Report of Assembly Committee on Natural Resources, p. 2) This legislation was designed to promote source reduction, recycling, and composting, in preference to landfill disposal and to maximize the use of all feasible source reduction, recycling, and composting options to reduce the amount of solid waste that must be disposed of by transformation (i.e. incineration) and landfill disposal. Public Resources Code §40051.
As part of "recasting" the legislation and eliminating "obsolete" definitions, the legislature borrowed some provisions and definitions from previous legislation, but it also enacted several new provisions and definitions to distinguish precisely between recycling and recyclables on the one hand, and solid waste on the other.
As recognized by this Court, local governments, through exercise of police power, have traditionally regulated solid waste, which, by practical definition means "valueless" materials. (Waste Management of the Desert, p. 484-85) At the same time, the legislature recognized that "recyclables" are commodities with value. (op. p. 484-85)
The new statutory scheme interpreted by Palm Springs expressly changed the object of recycling from handling wastes to handling "materials that would otherwise become solid waste". (Emphasis added.) It defined the recycling process to include collecting, sorting, cleansing, treating, and reconstituting the subject materials to return them to the economic mainstream in the form of raw materials for new, reused, or reconstituted products. (Public Resources Code 40180.)
Thus, after AB 939, recyclables separated from garbage, clearly were no longer a subset of solid waste. Solid waste became a last resort category of materials which could not be sorted or upgraded. Unless the owner were free to dispose of mixed materials to recyclers for a fee or otherwise this recycling process could never start.
Because the legislation distinguishes between "solid waste", which is subject to exclusive franchising to protect the public health and safety, and "recycling", which handles materials that would otherwise become solid waste, the intent is clearly to prefer source reduction and recycling as a matter of policy and priority (as stated explicitly in Public Resources Code §40051), and to recognize that solid waste is the last subset of the whole discard supply. Solid waste is only a derivative category composed of materials considered valueless that the preceding and preferred methods of source reduction, reuse, and recycling have been unable to recover.
In this reformulation, the collection process for materials that would otherwise become solid waste (recyclables) was made conceptually distinct under Public Resources Code §40195's definition of "solid waste handling," as "the collection ... or processing of solid waste."
Because recycling is preferable to and conceptually distinct from "solid waste handling", the exclusivity provision of Public Resources Code §40059 that applies only to "solid waste handling" does not apply to handling recyclables regardless of whether the owner pays a recycler to collect it.
California's Integrated Waste Management Board has developed guidelines for distinguishing recyclers from solid waste handlers by focusing on the amount of handled material that winds up in a landfill - reinforcing the key concept that waste is what's in a landfill, not what is generated by the owner.
WASHINGTON COUNTY'S ORDINANCE FAILS BOTH THE
STRICT SCRUTINY AND PIKE BALANCING TESTS
If strict scrutiny is applied, the ordinance can be upheld only if it falls within a narrow class of cases in which the municipality can demonstrate, under rigorous scrutiny, that it has no other means to advance a legitimate local interest. Carbone at p. 392. If Pike is applied, the ordinance would be upheld unless the burden imposed upon such commerce is clearly excessive in relation to the putative local benefits. Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970).
Meaningful scrutiny of the rationale for Washington Countys ordinance leads to its constitutional failure on both tests.
Appellants brief states Washington Countys expressed rationale and the underlying reasoning (Appellants brief at p. 57-59). The legislative intent was to provide for the safe, economical, and efficient collection, storage, transportation, and disposal of waste and to ensure adequate standards of service for the same. This was explained in practical terms to the District Court as:
"If you did not assure that a hauler had a service area and was able to make 'you know, cover his costs of providing that service, you would not be able to assure that those people had the necessary public service." (E.R. 231:21-25, 231:1-2)
Washington County further elaborates that its franchise system prevents "cream-skimming" in the waste collection business. Unless "cream" includes recyclables this is an oxymoron. There is no cream to be skimmed from waste. There are more desirable waste accounts because of volume in some service areas, but the "cream" is the account and quantity, not the quality of the material. In this case there is no evidence either that: (1) Woodfeathers charges a different service fee for disposal boxes than the franchised haulers or that (2) the franchised haulers profit from their drop box service. In sum, there is no evidence of cream-skimming.
If Washington County truly means that it needs to give a monopoly on recyclables to franchised haulers to subsidize, for political purposes, low collection rates, then it has stated the precise point of tension between the recycling and garbage industries to be addressed by this Court. Common sense undercuts Washington Countys stated grounds for its ordinance.
Garbage haulers should be compensated fairly for the waste collection service they provide. As a public service, the cost should be assessed to and subsidized by the users, the ratepayers. These amici have no quarrel that a garbage hauler's costs plus guaranteed profit and a rate of return should be borne by its subscribers, persons who generate waste and don't recycle.
If the actual cost of providing the service is higher to the garbage hauler because it cannot collect (and profit from) recyclables, the generators of waste must absorb this cost. If the particular service area is remote, scattered, or distant from a disposal facility or transfer station, again this is a cost which either is absorbed by the ratepayers or results in a competitive bid process whereby lower overhead garbage haulers assume responsibility for the remote service area. In other words, a service area with 2,000 citizens should not be forced to absorb the cost of maintaining a hundred packer truck fleet of a national garbage company - the service provider must be to scale of the service area.
Any of these are rational means to achieve the legitimate health and safety goals of Washington County, to ensure safe and adequate collection and disposal of waste. The unseen variable within Washington County's argument is endemic to the Ninth Circuit - it is politics.
Local elected officials understand that unless they franchise the collection of recyclables, valuable commodities, to garbage haulers, the garbage haulers threaten to raise rates. No elected official today wants to raise taxes.
But political expediency, the real rationale for some exclusive franchising, is a meager local benefit compared to the burden it imposes upon commerce and surely it cannot withstand rigorous scrutiny thereby failing both the Pike and strict scrutiny tests.
In Philadelphia v. New Jersey, (supra at p. 626) the Supreme Court held that a local legislative aim to reduce waste disposal costs is no excuse for impairing interstate commerce. See also Oregon Waste, supra, 511 U.S. 93 at p. 106.
This Court in Kleenwell was concerned about "cream-skimming" and the adverse affects from unregulated markets. But, in Kleenwell, again, the focus was collection of biomedical waste, something that is not recycled and largely is not recyclable.
When applied to solid waste, as distinct from material which is recycled, in fact, these amici agree with the Court's concerns in Kleenwell that local government should form service areas for the franchise of waste collection to avoid one company skimming the cream from waste disposal accounts and from ignoring or refusing to service less attractive service areas. When applied to waste, this Court in Kleenwell was correct on this point.
When applied to recyclables, Kleenwell does not apply and the ordinance is unconstitutional.
As to waste collection, courts have consistently held that barriers to interstate transport of waste, particularly in areas nearby to state borders (i.e. Carbone) such as the Portland, OR/Vancouver, WA, situation in this case, are unconstitutional.
CONCLUSION
Without doubt, there must be an objective basis for a solid waste company and local government to determine what it is required contractually and legislatively to collect to meet health and safety concerns. This has to be accomplished by an objective dividing line between recyclables and solid waste which, in turn, can only be accomplished by regarding it as a handling decision of the generator or in hindsight by whether the material goes to landfill or is recycled.
In earlier days, when natural resources were abundant and landfilling and incineration were the prime and unchallenged disposal methods, there was less reason to question what types of discards should be placed in the solid waste stream and which should be excluded as recyclable.
With legislative mandates for source reduction and recycling, discards that are marketable should be handled as any valuable commodity in free enterprise. If there is any mishandling, local governments have unquestioned power to regulate, short of outright ban, as health and safety warrants. There is no evidence that Woodfeathers mishandled what it transported.
For generators unwilling to segregate materials or to recycle, there will be higher garbage rates to subsidize the solid waste system to handle discarded waste. In contrast, the generators who want lower garbage collection costs and care to recycle, there should be a free market industry of recyclables to collect, upgrade, and market these discarded resources.