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Government Suppliers Consolidating Servs. v. Bayh

Citation: 23 ELR 20042
No. Nos. 92-1318, -1515, 975 F.2d 1267/35 ERC 1622/(7th Cir., 09/17/1992)

The court rules that Indiana waste transportation and disposal laws that impose restrictions on fleet dedication, backhauling, vehicle registration, bonding, and fees to discourage disposal of out-of-state solid waste violate the Commerce Clause of the U.S. Constitution. Indiana enacted these restrictions after its first attempt to regulate out-of-state waste was declared unconstitutional under the Commerce Clause in 1990. Brokers who arrange for hauling solid waste from the eastern United States to the midwestern United States and then haul goods on their return east argued that Indiana's restrictions on waste transportation and disposal will double their shipping costs. The district court upheld the Indiana restrictions, except the bonding requirement. On appeal, the court first holds that the restrictions, though not yet enforced, are ripe for review, because their enforcement will affect the plaintiffs' businesses. Waiting for regulations or specific applications is unnecessary. What the restrictions authorize is clear; only procedures and fees are uncertain. The court next holds that garbage is an article of commerce, and states are subject to constitutional scrutiny when they restrict its interstate movement. Turning to the merits, the court notes that it must examine the practical effect of the restrictions on interstate commerce to determine what level of scrutiny to apply. The court concludes that the restrictions discriminate in practical effect against interstate commerce, because those engaged in hauling out-of-state waste will have to significantly alter their method of operation or give up hauling waste into Indiana, while those engaged in intrastate waste disposal remain unaffected by the restrictions. Thus, the restrictions are subject to a higher level of scrutiny, which requires the state to demonstrate that the restrictions foster health and safety concerns that cannot adequately be served by nondiscriminatory alternatives. The court rejects the district court's use of the lesser level of scrutiny, which uses a balancing test derived from Pike v. Bruce Church, 397 U.S. 137 (1970), to determine whether the burden on interstate commerce is incidental or excessive in relation to putative local benefits. Applying heightened scrutiny, the court concludes that Indiana failed to demonstrate that public health risks could not be avoided by less drastic means. Indiana presented slight evidence of actual health risks posed by backhauling and did not address whether cleaning is effective or sufficient. Further, because the goods that are crosshauled with garbage are goods destined for consumption in the eastern United States, not in Indiana, the state is not acting to protect its own citizens' health. The state is primarily interested in preventing the commercial reputation of goods manufactured in Indiana from becoming tarnished by contamination during shipment and causing adverse health effects for their users. The court holds that Indiana's interest in the commercial reputation of Indiana goods is a legitimate local interest. However, the state has not demonstrated a realistic possibility that Indiana goods will be contaminated and that contamination will adversely affect their reputation. The court holds that the state's interest in catering to consumer distaste for the practice of backhauling is not entitled to the same deference as that for health and safety concerns, and the court notes that market forces will operate to protect Indiana's interest and discourage trucking companies from continued backhauling. Thus, the court holds that Indiana's backhaul ban and vehicle registration and stickering restrictions are unconstitutional under the Commerce Clause.

The court holds that Indiana's interest in preventing consumer fraud and deception is legitimate but does not save the vehicle registration and stickering restrictions. The sticker only notifies customers that a truck has carried waste into Indiana but does not extend to trucks that drop off waste in other states and does not give the date of the last garbage haul. The registration fee is like the discriminatory taxes and license fees struck down in a series of U.S. Supreme Court cases and if other states were to adopt similar registration fees, the effect on interstate commerce would be magnified. The court concludes that the registration and stickering restrictions would have a prohibitive effect on small operators and would divert the flow of waste from Indiana. The court next holds that the additional tipping fee for waste originating outside Indiana is unconstitutional, because it imposes a tax on waste haulers who cross the state line while sparing haulers who remain within the state. Like the tipping fee, the court holds that the surety bond requirement, which requires only out-of-state operators to post bond, is discriminatory on its face and does not survive heightened scrutiny. Finally, the court notes that the same result is reached under the Pike balancing test. If enforced, the restrictions would bar the importation of out-of-state waste, and this burden is excessive in relation to the putative local benefits.

[The district court's decision holding Indiana's first attempt to regulate out-of-state waste unconstitutional under the Commerce Clause is published at 21 ELR 20584. A related decision is published at 20 ELR 21026.]

Counsel for Plaintiffs-Appellants
Bruce Thall
2128 Locust St., Philadelphia PA 19103
(215) 545-2400

Counsel for Defendants-Appellees
David Hamilton
Barnes & Thornburg
1313 Merchants' Bank Bldg.
11 S. Meridian St., Indianapolis IN 46204
(317) 638-1313

Before CUMMINGS, EASTERBROOK, and RIPPLE, Circuit Judges.