County Comm'rs of Charles Co. v. Stevens

MURPHY, Chief Judge. We granted certiorari to determine whether a regulation banning disposal, in a county owned and operated landfill facility, of solid waste originating outside the county’s borders violates the Commerce Clause of the United States Constitution. 1 ²⁰⁶ I. The County Commissioners of Charles County own and operate a sanitary landfill in Pisgah, Charles County, Maryland. The purpose of the facility is to provide for the disposal of solid waste generated by Charles County residents. The landfill is part of the County’s Solid Waste Plan developed to comply with the requirements of Maryland Code (1982), § 9-501, et seq. of the Health-Environmental Article.

Charles County is expressly authorized by Code (1957, 1981 Repl.Vol.), Art. 25, § 14A to construct landfills and “to prescribe and enforce rules and regulations concerning the operation and manner of use of the disposal areas or facilities.” The Pisgah facility is the only sanitary landfill in Charles County. It consists of eighty-seven acres of land with a suitable soil base, an asphalt road offering access to a public road, weight scales, record keeping facilities and the heavy equipment necessary to provide daily soil cover. Commercial haulers must obtain a permit and pay a fee for using the landfill. Noncommercial trucks and utility trailers are also charged a fee.

Individuals hauling waste in any other vehicle may use the landfill without charge. The landfill’s operation is primarily funded from County tax revenues. Pursuant to its statutory authority, the County Commissioners adopted “Regulations Governing the Use of Charles County Public Trash Disposal Areas.” Regulation 4(d) provides: “No garbage, trash, or refuse collected outside the territorial limits of Charles County shall be disposed of in any Public Trash Disposal Area of Charles County.” (Emphasis supplied.) The regulation, on its face, governs only public landfills; it has no application to any privately owned facility. Albert W. Stevens operates a solid waste hauling business within and beyond the territorial limits of Charles County.

Stevens’ trucks have dumped refuse which was collected outside of Charles County at the Pisgah facility. The Coun ²⁰⁷ ty suspended one of Stevens’ permits for violating Regulation 4(d). As a result, Stevens filed a Bill of Complaint in the Circuit Court for Charles County seeking a declaration that Regulation 4(d) was unconstitutional under the Commerce, Equal Protection and Due Process Clauses of the federal constitution and under Article 24 of the Maryland Declaration of Rights. Stevens also sought an injunction barring enforcement of the regulation.

None of the material facts being in dispute, both the County and Stevens moved for summary judgment. The court (Bowling, J.) granted Stevens’ motion, concluding that Regulation 4(d) unconstitutionally discriminated against interstate commerce in violation of the Commerce Clause of the federal constitution. Relying on Philadelphia v. New Jersey, 437 U.S. 617 , 98 S.Ct. 2531 , 57 L.Ed.2d 475 (1978); Browning-Ferris v. Anne Arundel Co., 292 Md. 136 , 438 A.2d 269 (1981); and Shayne Bros., Inc. v. Prince George’s County, Md., 556 F.Supp. 182 (D.Md.1983), the court reasoned that “The regulation is basically an economic protectionist measure, which places a direct burden on interstate commerce. The Court has found no legitimate local purpose that would justify such a restriction.” The court rejected the County’s argument that “a regulation limiting access to a publicly-owned landfill should be subjected to a lesser degree of constitutional scrutiny than a regulation dealing with privately-owned sites.” It concluded that Regulation 4(d), even though limited to public landfills, “is invalid because it overtly discriminates against articles in interstate commerce.” The County appealed from the lower court’s declaratory decree, arguing that it could, consistent with the Commerce Clause, legally prohibit the disposal of solid waste originating outside of the County at its Pisgah landfill facility.

II

The Commerce Clause of the United States Constitution, art. I, § 8, cl. 3, performs a dual function. See ²⁰⁸ Hughes v. Oklahoma, 441 U.S. 322 , 99 S.Ct. 1727 , 60 L.Ed.2d 250 (1979). By its express terms, it is a source of Congress’ power “To regulate Commerce with foreign Nations, and among the several States . . .. ” It also acts as a limitation on the power of states to pass regulations and impose taxes that affect interstate commerce.

Id. at 326 , 99 S.Ct. at 1731 . In this latter role, the negative implications of the clause have been referred to as the “dormant” 2 or “negative” 3 commerce clause. The dormant commerce clause limitations apply with equal force to all laws and regulations that affect interstate commerce whether at the state, county or municipal level. Huron Portland Cement Co. v. City of Detroit, Michigan, 362 U.S. 440 , 80 S.Ct. 813 , 4 L.Ed.2d 852 (1960); Browning-Ferris, supra, 292 Md. at 142 n. 4, 438 A.2d 269 .

The decisions of the United States Supreme Court have developed a two part dormant commerce clause analysis. Nondiscriminatory laws and regulations which burden the flow of interstate commerce are subjected to a balancing test: “Where the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” Pike v. Bruce Church, Inc., 397 U.S. 137, 142 , 90 S.Ct. 844, 847 , 25 L.Ed.2d 174 (1970). But where it is shown that a state or local law or regulation discriminates against interstate commerce in favor of local interests, “the burden falls on the State to justify it both in terms of the local benefits flowing from the statute and the unavailability of nondiscriminatory alternatives adequate to preserve the local in ²⁰⁹ terests at stake.” Hunt v. Washington Apple Advertising Comm’n, 432 U.S. 333, 353 , 97 S.Ct. 2434, 2446 , 53 L.Ed.2d 383 (1977). Thus, as stated in Philadelphia v. New Jersey, supra, 437 U.S. at 624 , 98 S.Ct. at 2535 , “where simple economic protectionism is effected by state legislation, a virtually per se rule of invalidity has been erected ... [, the clearest example of which] is a law that overtly blocks the flow of interstate commerce at a State’s borders.” (Citations omitted.) At issue in Philadelphia v. New Jersey, supra, was a statute which made it illegal to dump solid waste originating outside of New Jersey in any landfill within the state.

Thus, the statute applied with equal force both to publicly and privately owned landfills. Private New Jersey landfill operators as well as several cities in neighboring states challenged the constitutionality of the law on commerce clause grounds. Initially, the Supreme Court rejected the state court’s holding that the definition of “commerce” for purposes of the dormant commerce clause is much narrower than the scope of that term when used as a source of congressional power. The Court held that restrictions on the interstate transportation of waste were subject to the same level of constitutional scrutiny as restrictions on commerce in other products.

Id. at 622-23 , 98 S.Ct. at 2534-35 . The Court stated that although the statute may have been enacted to further legitimate environmental policies, these goals “may not be accomplished by discriminating against articles of commerce coming from outside the State unless there is some reason, apart from their origin, to treat them differently. Both on its face and in its plain effect [the law] violates this principle of nondiscrimination.” Id. at 626-27 , 98 S.Ct. at 2537 . The Court’s decision stands for the proposition that a state may not close its borders to waste from other states while permitting unrestricted disposal of refuse generated in the state.

The Court said that “it may be assumed as well that New Jersey may pursue [its environmental goals] by slowing ²¹⁰ the flow of all waste into the State’s remaining landfills, even though interstate commerce may incidentally be affected.” (Emphasis in original.) Id. at 626 , 98 S.Ct. at 2537 . The Court continued: “Also relevant here are the Court’s decisions holding that a State may not accord its own inhabitants a preferred right of access over consumers in other States to natural resources located within its borders. West v. Kansas Natural Gas Co., 221 U.S. 229 [, 31 S.Ct. 564 , 55 L.Ed. 716 (1911)]; Pennsylvania v. West Virginia, 262 U.S. 553 [, 43 S.Ct. 658 , 67 L.Ed. 1117 (1923) ]. These cases stand for the basic principle that a ‘State is without power to prevent privately owned articles of trade from being shipped and sold in interstate commerce on the ground that they are required to satisfy local demands or because they are needed by the people of the State.’ ” Id. at 627 , 98 S.Ct. at 2537 (quoting Foster Packing Co. v. Haydel, 278 U.S. 1, 10 , 49 S.Ct. 1, 3-4 , 73 L.Ed. 147 (1928)).

In footnote six, the Court reserved the question whether a state might constitutionally exclude out-of-state waste from publicly owned landfill sites. “We express no opinion about New Jersey’s power, consistent with the Commerce Clause, to restrict to state residents access to state-owned resources . . .; or New Jersey’s power to spend state funds solely on behalf of state residents and businesses . ... ” (Citations omitted.) Id. 437 U.S. at 627 n. 6, 98 S.Ct. at 2537 n. 6. The issue before us today is the one left unanswered in footnote six of Philadelphia v. New Jersey, supra. In Browning-Ferris, supra, we reviewed the constitutionality of an Anne Arundel County ordinance which prohibited, inter alia, the disposal in or transportation through the county of any hazardous waste originating outside the county. The lower court declared this portion of the law unconstitutional as a violation of the Commerce Clause.

Relying on Philadelphia v. New Jersey, we affirmed. Judge Eldridge, writing for the Court, said: ²¹¹ “It is obvious that § 11-408(g)(1)(ii) of the Anne Arundel County Code does exactly what is forbidden by Philadelphia v. New Jersey. The ordinance, while permitting transportation and disposal of hazardous waste under certain conditions if the waste originates within the county, nonetheless closes down the county’s borders to all of those who would either transport or dispose of wastes originating from outside the county. Thus the ordinance overtly discriminates against articles in interstate commerce.

Since no reason has been advanced for treating out-of-county wastes differently from in-county wastes, apart from their origin, we hold that § 11-408(g)(1)(ii) is void under Philadelphia v. New Jersey, supra, as impermissibly discriminating against articles in interstate commerce.” 292 Md. at 142 , 438 A.2d 269 (footnotes omitted). It must be emphasized that, like the law struck down in Philadelphia v. New Jersey, the county ordinance applied both to public and to private disposal facilities. In Shayne Bros., supra, two private haulers of solid waste doing business in interstate commerce challenged the constitutionality of a Prince George’s County ordinance which prohibited the transportation of waste from outside the state to any dump or landfill within the county. There were only two landfills in the county, one county-owned and operated, and the other owned by the Maryland National Capital Park and Planning Commission and operated by a private commercial concern under contract with the Commission.

The court ruled that the ordinance was indistinguishable from that invalidated by Philadelphia v. New Jersey; it said that it unconstitutionally discriminated against interstate commerce. 556 F.Supp. at 185 . The court rejected the county’s reliance on footnote six in Philadelphia v. New Jersey, stating that the ordinance “does not limit its restrictions to state-owned resources. The prohibition in this Ordinance applies on its face to all dumps or landfills within the County, whether privately owned or County-owned.” Id. at 186 . ²¹² In each of these three cases, the law challenged was a regulation applying to all landfills located within the jurisdiction. The constitutionality of a restriction imposed only on publicly owned and funded landfills was not considered.

Consequently, these cases do not provide an adequate resolution of the issue before us today.

III

In Hughes v. Alexandria Scrap Corp., 426 U.S. 794 , 96 S.Ct. 2488 , 49 L.Ed.2d 220 (1976), the Supreme Court announced a complete exemption from dormant commerce clause restrictions for governments acting as market participants rather than market regulators. The law challenged in that case was a Maryland statute designed to encourage the removal of abandoned automobiles from state roadsides by paying subsidies to scrap processors. In order to collect the subsidy, the law required out-of-state scrap processors to provide more extensive documentation than that demanded of Maryland processors. The more onerous documentation requirements encouraged wreckers to take cars to Maryland processors rather than to processors located in other states.

A Virginia processor challenged the statute’s constitutionality on Commerce Clause grounds. In upholding the law, the Supreme Court acknowledged that the subsidy program, as it operated under the statute, placed a burden on the flow of interstate commerce. Nevertheless, it said that Maryland’s subsidy program was not the kind of governmental activity the dormant commerce clause was designed to cover. Id. at 805 , 96 S.Ct. at 2495-96 .

The Court distinguished this case from its prior decisions where states had “interfered with the natural functioning of the interstate market either through prohibition or through burdensome regulation.” Id. at 806 , 96 S.Ct. at 2496 . By contrast, it said, Maryland had entered the market to bid up the price paid to Maryland processors and wreckers. The Court concluded that “[n]othing in the purposes animating the Commerce Clause prohibits a State . . . from participating in the market and exercising the right to favor its own ²¹³ citizens over others.” (Footnotes omitted.) Id. at 810 , 96 S.Ct. at 2498 . In Reeves, Inc. v. Stake, 447 U.S. 429 , 100 S.Ct. 2271 , 65 L.Ed.2d 244 (1980), the Court addressed the issue whether a state could constitutionally give a preference to state residents in the allocation of cement manufactured at a state-owned cement plant.

In 1919, South Dakota built a cement plant to ease a regional cement shortage. For many years the plant produced more cement than South Dakota residents could use and sold the excess to out-of-state customers including the plaintiff, Reeves. In 1978, however, the plant found itself unable to satisfy the demand for its product and began to enforce a long existing policy of giving preference to South Dakota residents. Reeves was unable to obtain an adequate supply of cement from the state plant and challenged the state’s policy.

The Court found that South Dakota was acting as a market participant and not as a market regulator. Consequently, the Court held, the state’s policy of preferring its residents was not subject to dormant commerce clause scrutiny. It stated: “The basic distinction drawn in Alexandria Scrap between States as market participants and States as market regulators makes good sense and sound law. As that case explains, the Commerce Clause responds principally to state taxes and regulatory measures impeding free private trade in the national marketplace....

There is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market.” Id. at 436-37 , 100 S.Ct. at 2277 (citations omitted). The Court rejected Reeves’ argument that the preference policy was per se invalid under the analysis of Philadelphia v. New Jersey, supra. The Court said: “We find the label ‘protectionism’ of little help in this context. The State’s refusal to sell to buyers other than South Dakotans is ‘protectionist’ only in the sense that it limits benefits generated by a state program to those who ²¹⁴ fund the state treasury and whom the State was created to serve.

Petitioner’s argument apparently also would characterize as ‘protectionist’ rules restricting to state residents the enjoyment of state educational institutions, energy generated by a state-run plant, police and fire protection, and agricultural improvement and business development programs. Such policies, while perhaps ‘protectionist’ in a loose sense, reflect the essential and patently unobjectionable purpose of state government — to serve the citizens of the State.” Reeves, 447 U.S. at 442 , 100 S.Ct. at 2280 (footnote omitted). The Court noted that the statute “challenged in Alexandria Scrap was motivated by the same concern underlying South Dakota’s resident-preference policy — a desire to channel state benefits to the residents of the State supplying them.” Id. at 443 n. 16, 100 S.Ct. at 2280 n. 16. The Court rejected the notion that extension of the Alexandria Scrap exemption to cover the cement plant would permit the state to hoard the natural resources found within its borders.

The Court said: “This argument, although rooted in the core purpose of the Commerce Clause, does not fit the present facts. Cement is not a natural resource, like coal, timber, wild game, or minerals.” Id. at 443-44 , 100 S.Ct. at 2281 . Furthermore, the Court noted, South Dakota has not limited access to the materials used to make cement nor barred others from building cement plants in the state. “Moreover, petitioner has not suggested that South Dakota possesses unique access to the materials needed to produce cement. Whatever limits might exist on a State’s ability to invoke the Alexandria Scrap exemption to hoard resources which by happen-stance are found there, those limits do not apply here.” Id. at 444 , 100 S.Ct. at 2281 (footnote omitted).

Therefore, the Court found no reason to depart from the rule enunciated in Alexandria Scrap. ²¹⁵ In its most recent decision on the subject, the Court upheld the constitutionality of an executive order issued by the Mayor of Boston requiring that on all city-funded construction projects the work must be performed by a work force at least half of which is composed of city residents. White v. Massachusetts Council of Const. Employers, U.S.-, 103 S.Ct. 1042 , 75 L.Ed.2d 1 (1983). The Court held that the