27 ELR 21099 | Environmental Law Reporter | copyright © 1997 | All rights reserved

Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic County

The court affirms a district court decision that New Jersey's solid waste flow control laws violate the U.S. Constitution's Commerce Clause, but reverses the lower court's decision to stay an injunction against enforcement of those laws until two years after the exhaustion of appeals and certiorari petitions. The court first affirms the district court's decision not to sever New Jersey's statement of the purpose of self-sufficiency in waste disposal from the rest of the flow control laws and then separately analyze the waste disposal plans of the 22 waste disposal districts. The circuit court's decision in a prior opinion in this litigation that New Jersey's flow control laws discriminated against interstate commerce was not based just on New Jersey's stated goal to create a self-sufficient in-state waste disposal program. It was also based on the management districts' selection of facilities and the codification of this selection by state regulation. The court then affirms the district court's application of heightened scrutiny to the flow control statutes. Next, the court holds that defendants failed to show that the state lacks alternative nondiscriminatory means of achieving its interest. County authorities failed to address the question whether any nondiscriminatory system could now serve New Jersey's legitimate goals of solid waste disposal in an efficient and environmentally safe manner. In addition, the state failed to demonstrate why the district court's factual determination that nondiscriminatory alternatives were at least feasible was clearly erroneous. The district court listed several alternatives by which the state could lift its flow control laws yet ensure the financial integrity of the local government entities. The court therefore affirms the district court's conclusion that New Jersey's present flow control system is unconstitutional under the dormant Commerce Clause. The court also limits the scope of the district court's injunction against enforcement of the New Jersey flow control laws to the pertinent provisions of N.J.A.C. § 7:26-6.5.

The court next vacates the district court's stay of the injunction insofar as it will extend past the exhaustion of appeal or petition for certiorari in this case. None of the justifications that defendants raised support the extraordinary act of delaying the injunction of an unconstitutional law. Defendants have all the tools necessary to bring their waste disposal system within the ambit of the Commerce Clause. Their claim that they need a two-year stay in order to deal with the grave environmental threats posed by the district court's injunction is unfounded. And the cost of lifting flow control in New Jersey cannot support the district court's "discretion" to impose a two-year stay.

[Previous decisions in this litigation are published at 25 ELR 20620, 26 ELR 20256 and 20721, and 27ELR 20111.]

Counsel for Plaintiff
Mark R. Rosen
Mesirov, Gelman, Jaffe, Cramer & Jamieson
89 N. Haddon Ave., P.O. Box 183, Haddonfield NJ 08033
(609) 795-4988

Counsel for Defendants
Betty J. Christian
Steptoe & Johnson
1330 Connecticut Ave. NW, Washington DC 20036
(202) 429-3000

Before: STAPLETON, ROTH and GARTH, Circuit Judges

[27 ELR 21099]

ROTH, Circuit Judge.

This case comes before us a second time for a determination whether New Jersey's regulation of the disposal of solid waste is constitutional under the Commerce Clause of the Constitution. New Jersey's "flow control" statutes require waste management districts to contract with designated waste facilities for the disposal of locally generated waste. Following the Supreme Court's decision in C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 114 S. Ct. 1677, 128 L. Ed. 2d 399 (1994), we held that these laws discriminated against interstate commerce in purpose and effect by disfavoring out-of-state facilities and inhibiting the export of solid waste from New Jersey. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic Cty., 48 F.3d 701, 712-13 (3d Cir.1995)("Atlantic Coast I"). We then remanded the case to the district court to determine whether the flow control laws could meet heightened scrutiny under the "dormant" Commerce Clause.¹ Id. at 717-18.

After hearing extensive evidence, the district court concluded that New Jersey had not met its burden of demonstrating that it lacked alternate means of achieving its legitimate interest in creating a safe and effective system for in-state solid waste disposal. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders of Atlantic Cty., 931 F. Supp. 341, 359 (D.N.J.1996). Upon finding New Jersey's flow control laws unconstitutional, the district court granted a permanent injunction both to plaintiffs who process and dispose of construction and demolition waste (so-called "C & D" waste), and to plaintiffs who process other types of solid waste.² The district court then issued a two-year post-appeal stay on the permanent injunction, except as it applied to processors of C & D waste. Id.

The defendants are the New Jersey Department of Environmental Protection (NJDEP), the Bergen County Utilities Authority, the Hudson County Improvement Authority, the Passaic County Utilities Authority, the Mercer County Improvement Authority, the Essex County Utilities Authority, and the Cape May County Municipal Utilities Authority. With the exception of the Bergen County Utilities Authority, which has filed a separate brief, we refer collectively to the county authorities as "County Authority defendants."

The Carbone plaintiffs and the defendants have appealed the district court's decision. We will affirm the district court's findings that New Jersey's flow control laws and regulations are unconstitutional insofar as they discriminate against out-of-state waste processing facilities. We will not, however, affirm the lower court's post-appeal stay because the record cannot support the district court's exercise of "equitable discretion" to delay the enjoining of an admittedly unconstitutional regulatory system.

The district court had jurisdiction over this case pursuant to 28 U.S.C. § 1331. We have jurisdiction under 28 U.S.C. § 1291.

I. FACTS

As this nation's prosperity and consumption have increased over the years, so too has [27 ELR 21100] its solid waste. The processing and placement of garbage pose substantial economic and environmental concerns. In the past, states have attempted to meet those concerns by limiting or banning the importation of solid waste. The Supreme Court, however, has struck down these laws as unconstitutional because they discriminate against interstate commerce and thereby invoke heightened or rigorous scrutiny under the dormant component of the Commerce Clause. See City of Philadelphia v. New Jersey, 437 U.S. 617, 98 S. Ct. 2531, 57 L. Ed. 2d 475 (1978); Fort Gratiot Landfill v. Michigan Dep't of Natural Resources, 504 U.S. 353, 112 S. Ct. 2019, 119 L. Ed. 2d 139 (1992).

More recently, states and municipalities have erected barriers to the exportation of solid waste in the hope that in-state control of solid waste facilities will protect their communities from environmental harm, as well as guarantee a certain level of business for in-state processors. See Phillip Weinberg, Congress, the Courts, and Solid Waste Transport: Good Fences Don't Always Make Good Neighbors, 25 Envtl.L. 57 (1995). Like the previous bans on importation of solid waste, the locally enacted barriers against the exportation of solid waste implicate the dormant Commerce Clause because they raise concerns about state protectionism and "balkanization." Garbage, however unpleasant or unwanted, carries substantial value for those with the desire or know-how to dispose of it. In Carbone, the Supreme Court held that laws limiting the export of solid waste may be subject to heightened scrutiny because "the Commerce Clause presumes a national market free from local legislation that discriminates in favor of local interests." Carbone, 511 U.S. at 393, 114 S. Ct. at 1683 (striking down local ordinance requiring all solid waste to be processed through local transfer station).

The law challenged in this case falls into the second category of waste-control laws because it places barriers on the exportation of solid waste.

A. New Jersey's Regulation of the Disposal of Solid Waste

This Court has described New Jersey's comprehensive solid waste disposal system in detail in Atlantic Coast I, 48 F.3d at 704-708. We will provide a brief review of that system as it impacts this case.

In response to a waste disposal crisis, New Jersey enacted the Solid Waste Management Act ("SWMA"), N.J.S.A. §§ 13:1E-1 et seq., and the Solid Waste Utility Control Act ("SWUCA"), N.J.S.A. §§ 48:13A-1 et seq. in 1970 to provide a safe, comprehensive and effective means of solid waste disposal within the state. These statutes strictly control the collection, transportation and processing of solid waste generated within the state, thus earning the appellation "flow control laws." Under these laws, any waste disposal facility, regardless of its ownership or location, must clear two substantial hurdles before it disposes of solid waste generated within New Jersey. First, the facility must obtain a contract with one of New Jersey's twenty-two waste management districts. Unless a facility has been designated by a waste management district, that facility cannot dispose of locally generated waste. Second, even if the facility contracts with a district for service, the waste disposal facility must obtain the approval of the State's Department of Environmental Protection (hereinafter "the State" or NJDEP). Under this regime, out-of-state facilities have rarely been authorized to dispose of New Jersey's solid waste.³

Under SWMA, New Jersey is divided into twenty-two solid waste management districts, which include the State's twenty-one counties and the Hackensack-Meadowlands District. N.J.S.A. § 13:1E-19. The districts have formulated long-term solid waste disposal plans in accordance with the State's laws and regulations. N.J.S.A. § 13:1E-20. These plans have had to meet NJDEP's approval. See N.J.S.A. § 13:1E-24. Management districts have chosen between delegating their waste disposal responsibilities to designated municipal authorities within the district or exercising direct control over waste disposal themselves.⁴ Municipal authorities and districts in turn have met the State's waste disposal obligations by contracting with or operating their own waste disposal and recycling facilities.

Pursuant to the flow control laws, several waste disposal authorities have assumed substantial debt obligations to build waste disposal facilities "to assure the safe and efficient disposal of solid waste generated in their districts." Atlantic Coast II, 931 F. Supp. at 347 P 5. The district court found that "the solid waste public debt outstanding in New Jersey as of December 31, 1994, was $ 1.65 billion, which is the total of 53 separate bonds issued by New Jersey local authorities or counties." Id., at 348 P 12. Currently, the disposal facilities service their debt by charging "tipping fees" for disposing of waste.⁵ The fees charged by the designated facilities are significantly higher than the fees charged by their out-of-state counterparts. Id., at 349 P 17.⁶

Once an authority has chosen a particular private or public entity to service its waste disposal needs, that entity must seek approval from NJDEP (through registration and issuance of a permit) prior to commencing service. N.J.S.A. § 13:1E-5. A facility cannot obtain a permit unless it is designated by the municipal district or authority in its waste disposal plan. N.J.S.A. § 13:1E-4(b). Regional Recycling, Inc. v. State Dep't of Environmental Protection, 256 N.J. Super. 94, 606 A.2d 817 (App.Div.1991). All waste generated within the state must be directed to the processing facility designated by the district or municipal authority. See N.J.S.A. § 48:13A-4(c). The designation of the particular facility for waste disposal in each waste management district is codified in NJDEP regulations. N.J.Admin.Code tit. 7, § 7:26-6.5 (Supp.1996).

Although a waste management district or authority may contract with an out-of-state facility for waste disposal, NJDEP's policy of attaining self-sufficiency has favored operators that have facilities within the state or that are willing to construct a facility there. See Atlantic Coast I, 48 F.3d at 707-708. Waste management districts desiring to enter into agreements with out-of-state facilities have had to certify to NJDEP that no other sites within the district meet the district's waste disposal needs. N.J.S.A. § 13:1E-21(b)(3). The certification provision on its face does not appear to prohibit out-of-state solid waste facility operators from competing for an agreement to process a district's waste.⁷ Nevertheless, the certified processors for each district, presently listed in N.J.A.C. § 7:26-6.5, have been chosen under the NJDEP policy of reducing dependence on facilities outside the state for waste disposal services. See Atlantic Coast I, 48 F.3d at 707 (discussing NJDEP's self-sufficiency policy). As the district court stated at the first Atlantic Coast trial: "Although it is not the subject of a clear legislative direction [sic], it is equally clear that [NJDEP] administers the law with the specific goal that all waste generated in New Jersey be disposed of within the borders of the state." Atlantic [27 ELR 21101] Coast I, 48 F.3d at 707 (quoting district court) ([sic] in original). The imposition of this self-sufficiency policy on the selection of waste disposal facilities has resulted in the discrimination against out-of-state processors which we found in Atlantic Coast I.

Under the present flow control system, those who violate New Jersey law by disposing of solid waste at facilities not designated in N.J.A.C. § 7:26-6.5 risk the imposition of significant penalties. Section 13:1E-9 of the SWMA authorizes NJDEP's commissioner to take various civil and administrative actions against those who violate any provision of P.L.1970, c. 39 (the SWMA), or any code, rule or regulation adopted pursuant to that law. In addition, Section 13:1E-9(e) authorizes civil penalties totaling as much as $ 50,000 for each violation of the solid waste laws "provided that each day during which the violation continues shall constitute an additional, separate and distinct offense." N.J.S.A. § 13:1E-9(e). The State has employed this provision to penalize undesignated waste disposal facilities and enjoin them from engaging in the unauthorized collection and disposal of solid waste generated within the state. See e.g. State, Dep't of Environmental Protection v. Interstate Recycling, Inc., 267 N.J. Super. 574, 632 A.2d 526 (App.Div.1993) (NJDEP may pursue injunction against unlicensed waste disposal facility).⁸

Other provisions enforcing the requirement that waste disposal facilities be designated under N.J.A.C. § 7:26-6.5 include Section 13:1E-9.4 of SWMA, which authorizes civil forfeiture of all conveyances used or intended for use in the transport or unlawful disposal of solid waste. N.J.S.A. § 13:1E-9.4(d). In addition, persons who collect, dispose of or transport solid waste to undesignated sites subject themselves individually to civil fines of up to $ 10,000 for each day of violation. N.J.S.A. § 13:1E-9.4. Finally, an individual who engages in the unauthorized collection, transport or disposal of solid waste is guilty of a crime in the fourth degree, which carries with it the penalty of up to 18 months in prison. N.J.S.A. § 48:13A-12(a).

Taken as a whole, the waste disposal laws present substantial barriers to out-of-state firms wishing to collect, transport and process any of the waste generated within New Jersey. The State is able to enforce this regulatory system through its impressive array of rules, regulations, fines and other penalties.

B. Procedural History

The procedural history of this case is well documented by the district court in Atlantic Coast II, 931 F. Supp. at 343. Atlantic Coast, a Pennsylvania corporation operating a transfer station and recycling center for construction and demolition (C & D) debris, began this action on June 23, 1993, when it filed a complaint under 42 U.S.C. § 1983 against the Commissioner of NJDEP, seeking a declaratory judgment that the codification of waste disposal designations at N.J.A.C. § 7:26-6.5 violated the Commerce Clause and seeking a permanent injunction against the enforcement of this regulation.⁹ Atlantic Coast also promptly moved for a preliminary injunction.

On September 8, 1993, the district court denied Atlantic Coast's motion and found in favor of NJDEP. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders, 1993 U.S. Dist. Lexis 20,810 (D.N.J. Sept. 8, 1993). In doing so, the court followed our decision in J. Filiberto Sanitation, Inc. v. New Jersey Dep't of Envtl. Protection, 857 F.2d 913 (3d Cir.1988), and analyzed New Jersey's waste disposal system under the balancing test enunciated by the Supreme Court in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S. Ct. 844, 847, 25 L. Ed. 2d 174 (1970), rather than under the more rigorous test set forth in Maine v. Taylor, 477 U.S. 131, 138, 106 S. Ct. 2440, 2447, 91 L. Ed. 2d 110 (1986). Under the Pike test, a statute that burdens interstate commerce will be upheld unless that burden "is clearly excessive in relation to the putative local benefits." Pike, 397 U.S. at 142, 90 S. Ct. at 847. By contrast, the Maine test holds that statutes that discriminate against interstate commerce are unconstitutional unless the State can demonstrate that it has no other way of achieving a legitimate interest. The district court concluded that the benefits of the State's waste disposal system outweighed the burden placed on out-of-state facilities like Atlantic Coast, and on February 24, 1994, it entered final judgment in favor of defendants. Atlantic Coast appealed.

While Atlantic Coast's appeal was pending, the Supreme Court rendered its decision in C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 114 S. Ct. 1677, 128 L. Ed. 2d 399 (1994). In Carbone, the Court concluded that the town of Clarkstown's local waste control ordinance—somewhat similar to the waste control regulations inNew Jersey—discriminated against interstate commerce and therefore triggered strict scrutiny under the dormant Commerce Clause. The Court then held that Clarkstown had not met this level of heightened scrutiny. Carbone, 511 U.S. at 393-94, 114 S. Ct. at 1684.

This Circuit then applied the principles set forth by the Supreme Court in Carbone to Atlantic Coast's appeal and concluded that New Jersey's waste control laws discriminated—in purpose and practical effect—against interstate commerce. See Atlantic Coast I, 48 F.3d at 712. We remanded the case to the district court to allow it to apply the correct test under the dormant Commerce Clause. We also provided that Atlantic Coast could re-apply for injunctive relief since the district court's prior decision "was based primarily on its conclusion that Atlantic Coast had failed to demonstrate a likelihood of success on the merits of its challenge." Atlantic Coast I, 48 F.3d at 718. Since the applicable test entailed heightened scrutiny as defined by Maine v. Taylor, "the likelihood of success issue is a materially different one from that which the district court previously addressed." Id.

Atlantic Coast filed a new motion for a preliminary injunction on April 11, 1995. At the same time, the district court permitted several County Authorities to intervene as defendants.¹⁰ In the meantime, on July 11, 1994, C & A Carbone Inc., a New York waste disposal facility, along with the Waste Management Association of New Jersey and the National Solid Wastes Management Association, had filed an action against NJDEP seeking declaratory and injunctive relief, as well as damages.¹¹ Unlike Atlantic Coast, Carbone processes all types of solid waste, not just C & D waste.¹² Carbone's case was stayed pending this Court's decision in Atlantic Coast I. Following our remand of Atlantic Coast I, the two cases were consolidated. At the request of the parties, the district court re-opened the record and extensive discovery ensued. Carbone joined [27 ELR 21102] Atlantic Coast in its motion for a preliminary injunction.

On June 9, 1995, the district court conditionally granted Atlantic Coast's motion for a preliminary injunction as to C & D waste but denied Carbone's, based on the court's analysis of various equitable considerations. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders, 893 F. Supp. 301 (D.N.J.1995).¹³ The Carbone plaintiffs did not appeal this decision. The parties then conducted additional discovery.

Finally, on July 15, 1996, the district court issued a permanent injunction in favor of the plaintiffs, concluding that the defendants had failed to uphold their burden of demonstrating under the heightened scrutiny test of the dormant Commerce Clause that they lacked alternate means of achieving their solid waste disposal program. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders, 931 F. Supp. 341 (D.N.J. 1996) (hereinafter Atlantic Coast II). In entering final judgment in favor of the plaintiffs, the district court observed that "defendants have not even attempted to present a feasible nondiscriminatory alternative to the Court, but have merely caricatured each of the tools that may be used in building a new system." Atlantic Coast II, 931 F. Supp. at 351. However, although the court granted the Carbone plaintiffs a permanent injunction, it stayed that injunction for a period of "two years following the date on which this case is no longer subject to a right of appeal, or is no longer pending on appeal or on Petition for [Certiorari] to the United States Supreme Court." Id. at 358. The stay did not apply to the Atlantic Coast plaintiffs, who collect and dispose only of C & D waste.

Shortly thereafter, in an unrelated proceeding, Waste Management of Pennsylvania, Inc. v. Shinn, 938 F. Supp. 1243 (D.N.J. 1996), a New Jersey district court found that the State's policy of ensuring self-sufficient waste disposal "discriminates against out-of-state waste disposal facilities in favor of in-state economic interests without serving any legitimate local interest which could not be addressed by less restrictive means." Waste Management, 938 F. Supp. at 1256. Accordingly, the district court enjoined the State from taking any action to "preclude the use of out-of-state waste disposal facilities solely because said facilities are located outside of New Jersey." Waste Management, 938 F. Supp. at 1263. At the request of the State, the district court then modified the injunction as follows:

ORDERED that the Commissioner of the Department of Environmental Protection is permanently enjoined from implementing New Jersey's self-sufficiency policy as mandated under the State Plan to abrogate existing valid contracts or to reject or foreshorten contracts submitted to the New Jersey Department of Environmental Protection for review.

Waste Management of Pennsylvania, Inc. v. Shinn, No. 94-1983 (D.N.J. October 29, 1996).¹⁴

This injunction recognizes the conclusion that we reached in Atlantic Coast I that New Jersey's flow control laws discriminate against interstate commerce. By enjoining the State's future implementation of its self-sufficiency policy, the modified injunction removes only one of the barriers to New Jersey's waste disposal market for out-of-state waste disposal facilities. The injunction does not undo the twenty-two waste management district's plans for waste disposal. Neither does the Waste Management injunction affect N.J.A.C. § 7:26-6.5, which codifies the twenty two districts' designations of proper facilities for waste disposal. The Carbone plaintiffs therefore remain excluded from New Jersey's waste disposal market.

II. THE APPEAL

The County Authority defendants appeal the district court's decision on the ground that the district court should not have applied heightened scrutiny to the waste flow regulations. The State appeals the district court's decision on the ground that, even if heightened scrutiny was warranted, the State established at trial that it had no other means by which to achieve its legitimate interests in guaranteeing safe and effective solid waste disposal and protecting the financial integrity of the local entities which depend on flow control laws for operating revenues and debt service. Finally, the Carbone plaintiffs appeal the district court's stay as unconstitutional.

We shall examine each of these arguments in turn.

A. Choosing the Proper Test

We first review the district court's application of the heightened scrutiny test to New Jersey's flow control laws. According to the County Authorities, the district court applied an inappropriate level of scrutiny on remand. The County Authorities also argue that the district court should have "severed" the State's policy of ensuring self-sufficient waste disposal from the rest of New Jersey's flow control statutes and then analyzed the twenty-two district waste disposal plans separately, on a district by district basis. These arguments lack merit, as they ignore our earlier decision in Atlantic Coast I.

A statute triggers heightened scrutiny under the dormant Commerce Clause whenever that statute has a discriminatory purpose or effect on interstate commerce. See Harvey & Harvey, Inc. v. County of Chester, 68 F.3d 788, 797-98 (3d Cir.1995), cert. denied, __ U.S. __, 116 S. Ct. 1265, 134 L. Ed. 2d 213 (1996). In Carbone, the Supreme Court held that flow control laws that discriminate against out-of-state waste facilities trigger heightened scrutiny because they hoard a valuable economic resource such as garbage. 511 U.S. at 389-93, 114 S. Ct. at 1682-83. A discriminatory state statute is per se unconstitutional "save in a narrow class of cases in which the municipality can demonstrate, under rigorous scrutiny, that it has no other means to advance a legitimate state interest." Id. at 392, 114 S. Ct. at 1683, citing Maine v. Taylor, 477 U.S. 131, 106 S. Ct. 2440, 91 L. Ed. 2d 110 (1986).

Following the Supreme Court's decision in Carbone, we held that New Jersey's solid waste disposal laws, "in effect and by design," discriminated against interstate commerce and therefore triggered heightened scrutiny under the dormant Commerce Clause. Atlantic Coast I, 48 F.3d at 710. We described New Jersey's flow control laws as follows:

Like the governmental entities in the other cases involving local processing requirements, New Jersey is regulating a market which the Commerce Clause intended to be open to non-local competitors. More specifically, New Jersey is regulating the market for solid waste processing and disposal services in each of the districts by directing district consumers of those services to utilize a favored service provider who, in the absence of exceptional circumstances, operates a local facility. It necessarily follows, we conclude, that any Commerce Clause analysis of New Jersey's [27 ELR 21103] flow control regulations must employ the heightened scrutiny test and that the district court erred by subjecting them only to the balancing test of Pike.

Id., at 710-11 (emphasis added). Based on our conclusion that the State's solid waste program was discriminatory, we remanded the case to the district court to determine whether the statute nevertheless fell into that "narrow class of cases" in which the State could prove that it lacked viable means of satisfying a legitimate, nondiscriminatory interest. Id., at 717.

On remand, the defendants argued that a later opinion of this Circuit, Harvey & Harvey, Inc. v. County of Chester, 68 F.3d 788 (3d Cir.1995), "clarified" our earlier decision in Atlantic Coast I. In Harvey, we held that the Supreme Court's decision in Carbone did not "establish a per se rule subjecting all flow control ordinances to strict scrutiny." Harvey, 68 F.3d at 800. According to the County Authorities, the district court, in light of our decision in Harvey, should have severed the State's purpose of self-sufficiency from our consideration of the statute in Atlantic Coast I and should have then reviewed the flow control laws and the individual waste disposal plans of the twenty-two waste disposal districts separately to determine whether they were still discriminatory. The district court rejected the County Authorities' request. "The Third Circuit found the system to be discriminatory, and the Court will not revisit the holding." Atlantic Coast II, 931 F. Supp. at 346.

We affirm the district court's decision because our determination in Atlantic Coast I that New Jersey's flow control laws discriminated against interstate commerce was based not just on New Jersey's stated goal to create a self-sufficient in-state waste disposal program. It was also based on the management districts' selection of facilities and the codification of this selection by state regulation. As we noted in Harvey, a law that directs waste to a particular facility will not necessarily violate the dormant Commerce Clause as long as out-of-state operators are given an even chance to compete for the opportunity to dispose of the state or district's waste. See 68 F.3d at 802. In New Jersey, however, state policy had precluded such open competition and the list of facilities designated in N.J.A.C. § 7:26-6.5 reflects that policy. As a result of this discriminatory policy, the flow control regulations, through § 7:26-6.5, have limited the facilities that can accept waste generated in a particular district to those so designated in the regulation. Because the policy has affected the existing designations, it cannot be "severed" from the rest of the statute for purposes of review under the Commerce Clause.

The fact that a district court in the Waste Management case has enjoined the State of New Jersey from acting on its policy of abrogating, rejecting or foreshortening contracts between management districts and out-of-state waste disposal facilities does not alter our determination that New Jersey's flow control statutes discriminate against out-of-state facilities. See Waste Management, No. 94-1983, amended order (D.N.J. October 29, 1996). First, the Waste Management injunction, as modified by the district court, applies only prospectively to future contracts between management districts and waste disposal facilities. It does not affect the current contractual agreements codified at N.J.A.C. § 7:26-6.5, which are the result of a discriminatory process. Second, the Waste Management injunction addresses only the state's approval or ratification of a waste management district's disposal plan, and not the district's initial choice of a facility. Our finding of discriminatory purpose and effect in Atlantic Coast I, however, applied both to the waste management district's choice of a facility to service its needs and to the State's approval of that choice.

In response to the argument of the County Authorities, Atlantic Coast urges that the defendants should not use this appeal to relitigate issues already resolved in prior rulings by this Court. We agree. The law of the case doctrine bars our reconsideration of issues previously resolved by an earlier panel. See Fagan v. City of Vineland, 22 F.3d 1283, 1290 (3d Cir.1994); Hayman Cash Register Co. v. Sarokin, 669 F.2d 162 (3d Cir.1982). Since none of the traditional exceptions to the law of case doctrine apply here (our previous decision was not clearly erroneous, no intervening "new law" has been decided other than the district court's injunction in Waste Management, and no new facts have surfaced), there is no reason to revisit the issue of whether the New Jersey waste disposal system is discriminatory. See generally Bridge v. United States Parole Commission, 981 F.2d 97, 102 (3d Cir.1992) (discussing general exceptions to law of case doctrine). A previous panel found discriminatory effect in Atlantic Coast I, 48 F.3d 701. We are bound by that determination. Nothing we said in Harvey changes our decision in Atlantic Coast I as it applies to the facts of this case. Accordingly, we affirm the district court's application of heightened scrutiny to New Jersey's flow control statutes.

B. Application of Heightened Scrutiny

Concluding that the district court correctly applied heightened scrutiny to New Jersey's waste disposal statutes, we now turn to the district court's finding that the flow control statutes were unconstitutional because the State of New Jersey did not uphold its burden under the heightened scrutiny test.¹⁵ While we review the lower court's application of constitutional law de novo, we will reverse the district court's factual findings only if they are clearly erroneous. Fabulous Assoc., Inc. v. Pennsylvania Public Utility Comm'n, 896 F.2d 780, 783 (3d Cir.1990).

Once a district court finds that a state statute discriminates against interstate commerce, "the burden falls on the State to demonstrate both that the statute 'serves a legitimate local interest,' and that this purpose could not be served as well by available nondiscriminatory means." Maine v. Taylor, 477 U.S. at 139, 106 S. Ct. at 2447; Hughes v. Oklahoma, 441 U.S. 322, 99 S. Ct. 1727, 60 L. Ed. 2d 250 (1978). We now engage in the two-part inquiry set forth by Maine and Hughes.¹⁶

The district court found five legitimate justifications for New Jersey's solid waste disposal regulatory system:

(i) assurance of long-term disposal capacity for all waste generated in New Jersey;

(ii) support for development of environmentally safe capacity; (iii) promotion of recycling and source reduction; (iv) assistance in the prevention of illegal dumping and the control of illegal facilities; and (v) protection of the fiscal integrity of the governmental entities.

Atlantic Coast II, 931 F. Supp. at 346, P 1. We agree that these five interests are legitimate objectives of the State. To justify a discriminatory statute, however, a state must do more than cite a legitimate interest; it must also show that it lacks alternative nondiscriminatory means of achieving that interest. [27 ELR 21104] Here, we agree with the district court that the defendants have failed to satisfy this second prong.

In Atlantic Coast II, the district court stated that "defendants have not even come close to proving that a constitutional, nondiscriminatory alternative cannot address the various interests identified in PP1 and 21, supra, as well or better than the current flow control regulations." Atlantic Coast II, 931 F. Supp. at 351, P25. The district court further observed:

The above-market tipping fees that constitute the heart of New Jersey's flow control system are more or less a hidden tax paid by New Jersey residents. The tipping fees are used to cover not only the debt service of the bonds issued to fund facilities under flow control, but also to cover the fixed costs of operating waste disposal facilities, financing recycling programs and other environmentally friendly recovery projects, and developing long-term disposal plans. Those activities could be financed through up-front taxes, user fees or other charges that do not discriminate against interstate commerce. Even if there are significant costs to implementing the necessary revisions to the current flow control system, nothing in the record suggests that these would be exorbitant or beyond the capabilities of reasonable fund-raising alternatives. And, in any case, the threat of some increase in costs cannot negate the constitutional mandate of the dormant Commerce Clause.

Id. at 353-54 (emphasis added). We affirm the district court's interpretation of the dormant Commerce Clause and its application of the Clause to the facts.

The County Authorities and the State argue, however, that the flow control laws are indispensable. First, they claim that these laws are necessary to prevent illegal dumping and other environmentally unsound practices. Second, they contend that these laws are necessary to underwrite the cost of paying off the debt on the locally constructed waste disposal facilities. In regard to the first of these contentions, neither the County Authorities nor the State has cited record evidence to show that alternative measures are unable to prevent illegal or unsafe dumping of waste.¹⁷ Accordingly, we will consider their argument only as it pertains to the financial effect of giving up the current flow control system.

The County Authority defendants and State defendants each attack the district court's decision on slightly different grounds. The County Authorities argue that "Plaintiffs/Appellants have offered no evidence that there was any alternative, as of 1970, that could have achieved the lawful public purposes 'as well' with less discrimination against interstate commerce." County Authorities Br., at 11 (emphasis added). This argument lacks merit for several reasons. First, it locates the burden of proof with the wrong party. The Supreme Court has stated quite clearly that once a statute triggers heightened scrutiny, the party defending the statute bears the burden of proof. See Maine, 477 U.S. at 138, 106 S. Ct. at 2447. Second, the County Authorities focus too much attention on the phrase "as well" when defining the content of the heightened scrutiny test. The heightened scrutiny test, however, concerns itself with questions of viability, not questions of convenience. See Carbone I, 511 U.S. at 392, 114 S. Ct. at 1683. Finally, the County Authorities' argument fails because it measures the viability of the nondiscriminatory alternatives in terms of past and not present events. The Supreme Court has held that environmental and economic arguments must be rejected "absent the clearest showing that the unobstructed flow of interstate commerce itself is unable to solve the local problem." Id. (emphasis added). The operative word in this sentence is the verb "is". The question is not what was the best system for New Jersey when the statutes were adopted, but rather whether any non-discriminatory system could now serve New Jersey's legitimate goals of solid waste disposal in an efficient and environmentally safe manner. Because the County Authorities have failed to address this question with evidence relating to the present time, they have not fulfilled their burden under the dormant Commerce Clause.

Like the County Authorities, the State of New Jersey has also failed to demonstrate why the district court's factual determination that nondiscriminatory alternatives were at least feasible was clearly erroneous. The gravamen of the State's defense is that the elimination of flow control laws will force local waste disposal authorities to compete with out-of-state firms. Competition, in turn, will preclude local facilities from charging inflated tipping fees. Consequently, local facilities constructed with bond money will attract lower volumes of waste and will lose operating revenue, reducing their ability to pay off their debt to the bondholders. Debt issues will risk default, and local waste disposal facilities will incur operating deficits. Finally, default on the solid waste disposal facilities will affect the health of debt instruments issued by other government entities in New Jersey. Atlantic Coast II, 931 F. Supp. at 350, P20. The State defendants descriptively dub this scenario as the "death spiral."

Although we concede that the consequences of defaulting on the local waste facilities' substantial loans cannot be minimized or ignored, we disagree with the State's presumption that its problems are insurmountable. The district court listed several alternatives by which the State could lift its flow control laws yet ensure the financial integrity of the local government entities. In particular, the court suggested that the State: (1) issue new bonds to refinance its in-state solid waste disposal facilities, (2) implement "user charges" for those who use the facilities or a "system benefit charge" to make up for lost funds, (3) issue a statewide solid waste tax (or assessment) on all waste generated in state regardless of where it was sent (in or out of state) for disposal, (4) have the municipalities establish long term contracts with solid waste facilities (assuming, of course, that out-of-state facilities could compete with in-state facilities on an equal footing), or (5) fund the system through a combination of municipal, county, or State "general revenues" (i.e. taxes). Atlantic Coast II, 931 F. Supp. at 351, P23.

According to the district court, the State defendants did not shoulder their burden of demonstrating that none of the suggested alternatives could satisfactorily finance—either individually or through some combination—their waste disposal needs. Rather, the defendants "merely caricatured each of the tools that may be used in building a new system." Id. at 351, P25. The district court elaborated:

In its submissions to the Court, the State does not attempt to develop a comprehensive, cohesive plan using the wide variety of political and financial tools available to it. Rather, the defendants have looked at a series of one-dimensional alternatives in isolation and only attempted to prove that no one technique (e.g., system benefit charges, user fees, new taxes, refunding bonds, county or state assumption of debt) can possibly do the job. These isolated distortions do not constitute a fair and adequate attempt at evaluating available alternatives.

Atlantic Coast II, 931 F. Supp. at 354. Based on the evidence in the record, we conclude that the district court did not commit clear error when it determined that viable alternatives to the flow control laws could accomplish the defendants' legitimate objectives. Moreover, on appeal, the State has also failed to demonstrate why the current flow control regulations are the only viable means of ensuring the financial integrity of its waste management districts.¹⁸

[27 ELR 21105]

We sympathize with the State defendants to the extent that local and state officials understandably presumed New Jersey's flow control laws to be constitutional when they issued bonds to build the local waste disposal facilities. See Filiberto, 857 F.2d at 923. Nevertheless, sympathy cannot cloud reason. It is clear to this Court that a key benefit of discriminatory flow control laws is that they ensure higher levels of revenue for local facilities by excluding foreign competition. The Supreme Court has held, however, that "by itself . . . revenue generation is not a local interest that can justify discrimination against interstate commerce." Carbone I, 511 U.S. at 393, 114 S. Ct. at 1684. We cannot permit the State of New Jersey to discriminate in order to raise money to service waste management debt merely because the funds are necessary to finance that debt. In reviewing the State's need to raise money to finance the local authorities' debt obligations, the district court properly did not limit its consideration to waste management district fees as the sole possible source of those funds. The State has not proven—to the district court or to this Court—why none of the five alternate methods of financing described by the district court are able to service the local authorities' debt.

With regard to the district court's suggestion that the State issue new "refunding" bonds to refinance the disposal facilities' debt, the State contends that, depending on the interest rate of the new bonds, it might incur huge losses. This may be true, but the State's financial losses alone cannot justify discrimination against interstate commerce. The Supreme Court has long held that the expense of dismantling a discriminatory system does not justify a state's continued enforcement of that system. McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18, 51, 110 S. Ct. 2238, 2257 n.35, 110 L. Ed. 2d 17 (1990) (tax refund remedy for statute struck down as violative of dormant Commerce Clause could not be denied on grounds of cost to State). Cf. Watson v. City of Memphis, 373 U.S. 526, 537, 83 S. Ct. 1314, 1321, 10 L. Ed. 2d 529 (1963) (vindication of equal protection rights "cannot be made dependent on any theory that it is less expensive to deny than to afford them").

The State further argues that a bond refinancing "would likely have a significant and detrimental impact on the State's bond rating and thus, the State's ability to raise capital for other public works." Without addressing the accuracy of this forecast, we merely point out that a bond refund would impact only one method of raising capital. It would not affect the State's ability to finance public works through taxes or other sources of revenue.

The district court also suggested that the State implement "user charges" or a "systems benefit charge" to make up for the local waste disposal facilities' lost revenue in the event that the flow control laws are declared unconstitutional. The State responds that this alternative is not viable because (1) it may be unauthorized under current state statutes as a source of revenue, and (2) such an alternative can work only "when a jurisdiction is writing on a clean slate". We disagree. First, the legality of the proposed alternative under state law is irrelevant to a court's heightened scrutiny inquiry because the legislature can re-write its statutes if it has the desire or the need to do so. Second, the fact that the waste facility bonds are already outstanding does not explain why their debt could not be serviced with revenues from supplemental user charges as opposed to revenues from a captured waste-disposal market.

With regard to the suggestion for a special tax on all waste generated within the State, regardless of its final destination, the State suggests that this tax itself might be held unconstitutional. Because this issue is not before us, we will not determine the constitutionality of a special tax on solid waste. Even if we should assume, however, that this alternative is not viable, there are still other avenues open to the State. General tax revenues, raised either by the State or by the individual counties, can service the debt of the local facilities. In short, various options are open to State and local officials if they desire to use them.

We add that this is not the first time a local or state law has been struck down under the Commerce Clause to the financial detriment of a local entity that depended on a prior regime.¹⁹ In Carbone, the Supreme Court struck down Clarkstown's flow control ordinance, despite the town's worry that the local waste disposal facility might lack long-term survival. The Court opined that "having elected to use the open market to earn revenues for its project, the town may not employ discriminatory regulation to give that project an advantage over rival businesses from out of State." 511 U.S. at 394, 114 S. Ct. at 1684. The State of New Jersey argues nevertheless that the principles expounded by the Supreme Court in Carbone are inapplicable because substantially greater financial concerns arise with the elimination of a state-wide flow control system than with a county or district-wide system. We cannot accept this argument since it would insulate large regulatory systems from the dictates of the Commerce Clause, despite the fact that they cast a wide net and hoard a valuable resource, e.g., an entire state's solid waste. It makes little sense to permit the perpetuation of wide-spread discrimination simply because the cost of dismantling the discriminatory system is greater on a state-wide level than it is on a district or county level.

Based on the preceding analysis, we hold that the State of New Jersey cannot protect the local waste disposal market, and thereby exclude out-of-state competitors, in order to use inflated revenues to finance the substantial debts of its waste management districts. Alternatives to the current regime of flow control laws are available to the State and to the County Authorities. We therefore affirm the district court's conclusion that New Jersey's present flow control system is unconstitutional under the dormant Commerce Clause.

C. The Scope of The Injunction

After it had determined that New Jersey's regulations of flow control violated the commerce clause, the district court enjoined their enforcement:

An INJUNCTION is hereby entered . . . against enforcement of the New Jersey waste flow regulations to the extent these regulations discriminate against interstate commerce. . . .

Atlantic Coast II, 931 F. Supp. at 359. Due to the fact that New Jersey's waste disposal statutes cover a number of subjects unrelated to flow control, the above language of the district court's injunction is not clear as to which parts of SWUCA or SWMA are to be enjoined. Consequently, we shall clarify the injunction based on the representations of the parties at oral argument, as well as our understanding ofthe plaintiffs' petition, which seeks "a declaratory judgment that the solid waste plans identified in N.J.A.C. § 7:26-6:5 violate the Commerce Clause of the United States Constitution and an injunction against enforcement of these regulations[,]" 931 F. Supp. at 343. In doing so, we eliminate the necessity for further proceedings in the district court regarding this important issue and direct the clerk of this court to enter the injunction as set forth at the end of this opinion. See Evans v. Buchanan, 555 F.2d 373, 381 (3d Cir.1977) (en banc) (modifying district court's interdistrict injunctive remedy in desegregation of public school system).

N.J.A.C. § 7:26-6.5 codifies the designated facilities for waste disposal within [27 ELR 21106] each of New Jersey's twenty-two waste management districts.²⁰ As we have discussed in Part II.B., this regulation is unconstitutional because it has discriminated against out-of-state waste disposal facilities in the process through which facilities were designated to dispose of each district's waste.

In view of the specificity of the plaintiffs' request in their complaint, as well as our understanding of the dormant Commerce Clause, we limit the scope of the district court's injunction to the pertinent provisions of N.J.A.C. § 7:26-6.5. Pursuant to the effect of the injunction, the disposal facilities presently listed there can no longer be considered the facilities to which each district's solid waste must be directed. The waste management districts must modify their plans to select new disposal facilities pursuant to N.J.A.C. § 7:26-6.6 and 6.7. It goes without saying that the waste management districts must not discriminate against out-of-state facilities when they modify their plans.

Moreover, insofar as New Jersey's self-sufficiency policy has precluded the designation of out-of-state waste disposal facilities, this injunction mirrors the injunction issued in Waste Management in that NJDEP can no longer implement its self-sufficiency policy—either formally or informally—by rejecting or hindering contracts between waste management districts and out-of-state facilities or operators.

The injunction does not bar the enforcement of the State's remaining portions of either SWUCA or SWMA. The surviving portions of these statutes are not included within the scope of plaintiffs' petition and, in addition, they do not, in and of themselves, discriminate against interstate commerce. For example, out-of-state facilities wishing to proceed in the collection of solid waste will have to obtain a certificate of public convenience from the Board of Public Utilities and register with NJDEP prior to commencing service. N.J.S.A. § 48:13A-6. The certificate allows the State to regulate the rates charged by the individual seeking certification. See N.J.S.A. §§ 48:13A-4, 7.5, 7.13, 7.15, 7.20. Out-of-state facilities also will remain subject to New Jersey's environmental laws and regulations, as well as to its record keeping requirements and transportation regulations. See N.J.S.A. § 48:13A-9(b) (enabling State to suspend corporation's certificate to collect waste if it violates "any provision of any laws related to pollution of the air, water or lands" of the state); N.J.S.A. § 48:13A-7.16 & 7.17 (enabling Board of Public Utilities to compel "any person engaged in the business of solid waste collection" to provide annual report, business records or documents related to collection services).

The State has also alluded to potential traffic disruption that may result from imposition of an injunction. However, the injunction concerns only the ultimate destination of the trash, as opposed to the manner in which it is collected. Moreover, local authorities will be able to retain the discretion to regulate the traffic routes used by in-state and out-of-state trash collectors alike.²¹

In citing the above regulatory provisions that will remain in effect despite the enjoining of N.J.A.C. § 7:26-6.5, we do not present an all-inclusive list. We do not need to do so because, if the process for selecting waste disposal facilities no longer discriminates against interstate commerce, neither will the regulatory provisions enforcing such a nondiscriminatory system. Although the State of New Jersey may no longer preclude the designation of out-of-state waste disposal facilities or operators, the State and the County Authorities remain free to regulate the flow of waste within New Jersey so long as the State's laws and regulations treat in-state and out-of-state facilities equally. See Harvey, 68 F.3d at 801-02.

III. THE STAY

After it had found the flow control laws in New Jersey to be unconstitutional, the district court took the extraordinary step of issuing, sua sponte, a two-year stay of the Carbone plaintiffs' permanent injunction. The stay is to go into effect upon the exhaustion of all appeals or petitions for certiorari to the Supreme Court. In justifying the stay, the district court reasoned:

The Court recognizes the enormity of the task which Carbone I and the Third Circuit opinion in Atlantic Coast have imposed on New Jersey citizens. To scrap immediately a detailed regulatory plan implemented over the course of decades and relied upon by investors, business people, and political figures would wreak havoc on the financial and environmental well-being of New Jersey citizens. The Court must permit the relevant governmental bodies to develop the specific nondiscriminatory alternative which they wish to employ, and this development cannot be done overnight.

Atlantic Coast II, 931 F. Supp. at 358.

As a consequence of the stay, Carbone and similarly situated waste disposal firms may not collect or dispose of trash until two years after the last appeal or petition for certiorari has been denied. The Carbone plaintiffs appeal the imposition of the stay as unconstitutional. The State and the County Authorities defend the stay as a permissible exercise of equitable discretion. Our review of the legal issues involved in the issuance of the stay, including its constitutionality, is plenary. The fashioning of the remedy is reviewed for abuse of discretion, and the district court's findings of fact are reviewed for clear error. See Northeast Women's Center, Inc. v. McMonagle, 939 F.2d 57, 61 (3d Cir. 1991).

We agree with the plaintiffs. Whatever the district court's power may be to delay constitutional relief, none of the justifications raised by the defendants support the extraordinary act of delaying the injunction of an unconstitutional law.²² Consequently, we will vacate the district court's stay insofar as it will extend past the exhaustion of appeal or petition for certiorari in this case.²³

Before arriving at this conclusion we have carefully considered the contentions of the defendants. They provide three justifications for the district court's stay. First, the defendants attempt to analogize this case to school desegregation²⁴ and prison reform²⁵ [27 ELR 21107] cases by arguing that they need time to create a new waste disposal system that does not violate the Commerce Clause. Second, the defendants maintain that a stay is necessary to combat the environmental effects of allowing out-of-state entities access to New Jersey's waste disposal market. Finally, the defendants contend that the financial cost of an immediate injunction is so great that it justifies the district court's post-appeal stay.

We reject the defendants' arguments as lacking merit. First, the defendants maintain that the district court's injunction forces them to create an entirely new waste disposal system, and that the two-year stay is necessary to enable them to solve the administrative difficulties of constructing such a system. We disagree. As we stated in Part II. C., supra, the district court's injunction extends no further than N.J.A.C. § 7:26-6.5. Our decision today leaves the bulk of New Jersey's waste disposal system in place, except that the twenty-two waste management districts must modify their waste disposal plans and choose new facilities to service their needs in a non-discriminatory fashion. The twenty-two management districts already have the power to modify their disposal plans under N.J.A.C. § 7:26-6.6. Moreover, NJDEP may issue temporary emergency orders to redirect the flow of waste pursuant to N.J.A.C. § 7:26-6.7(a).²⁶ Thus, the defendants have all the tools necessary to bring their waste disposal system within the ambit of the Commerce Clause. A two-year post-appeal stay, which would subject the Carbone plaintiffs and similarly situated out-of-state facilities to an unconstitutional regulation, is therefore not justified by the defendants' so-called "administrative" concerns.

The defendants also claim that they need a two-year stay in order to deal with the grave environmental threats posed by the district court's injunction. According to the defendants, an immediate injunction might result in chaos or a disruption of waste disposal and collection within the state, thereby creating a multitude of environmental and health-related problems.

The defendants' fears are unfounded. The district court's injunction does not threaten the environmental well-being of the citizens of New Jersey in any manner whatsoever. All it does is force the waste management districts to choose new waste disposal facilities on a non-discriminatory basis. The Commerce Clause itself teaches us that we cannot assume that out-of-state facilities will dispose of or collect waste in any less an environmentally responsible manner than facilities located within the State. Furthermore, the district court's injunction does not affect those provisions of the SWUCA or SWMA that regulate the granting of certificates of convenience or the suspension of those certificates for violations of New Jersey's air, water or land pollution laws. Thus, just as the defendants' environmental arguments are insufficient to support their Commerce Clause argument, so too are they insufficient to support their argument for the district court's stay.

In reality, the relief that the defendants seek is relief from the financial threat to local waste disposal facilities if those facilities are unable to charge artificially high tipping fees. This economic impact is real but it cannot justify the district court's imposition of a post-appeal stay. As we demonstrate below, the Supreme Court has established that, whatever the economic costs of remedying a constitutional violation, the mere expense of the remedy cannot justify the withholding of the plaintiffs' requested relief.

The financial expense arguments offered by the State and the County Authorities in support of the district court's stay mirror the defendants' arguments in favor of finding flow control constitutional under the Commerce Clause. By enjoining the enforcement of New Jersey's flow control laws, the defendants urge, we shall cause the local waste disposal facilities to lose a large portion of the tipping fees on which they depend to service their debt. Just as we rejected this argument in our Commerce Clause analysis, we must also reject it in our discussion of the district court's stay.

Our Constitution ordinarily demands "prompt rectification" of constitutional violations, absent an "overwhelmingly compelling reason". Watson, 373 U.S. at 533, 83 S. Ct. at 1318 (1963). The Supreme Court's decision in Watson itself demonstrates that the defendants' financial problems could not constitute the "compelling reason" for delaying a remedy. Watson involved the desegregation of public parks. Rejecting the defendants' argument that desegregated parks would require additional supervision and thereby cost too much money, the Supreme Court declared, "It is obvious that vindication of conceded constitutional rights cannot be made dependent upon any theory that it is less expensive to deny than to afford them." Id., 373 U.S. at 537, 83 S. Ct. at 1321.

A generation later, the Supreme Court echoed this them in McKesson v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18, 110 S. Ct. 2238, 110 L. Ed. 2d 17 (1990). McKesson concerned the issue of what constituted adequate relief for the wrongful payment of a state tax that had been held unconstitutional because it violated the dormant Commerce Clause. Unlike the district court's stay of the injunction in this case, the Florida Supreme Court in the McKesson case had at least enjoined the future enforcement of the unconstitutional state tax. The state court had nevertheless denied the petitioners any refund for taxes already paid. The Supreme Court held that this denial of a refund was unconstitutional because it failed to alter Florida's discrimination against the petitioners, who had paid the higher tax.²⁷ "If a State places a taxpayer under duress promptly to pay a tax when due and relegates him to a postpayment refund action in which he can challenge the tax's legality, the Due Process Clause of the Fourteenth Amendment obligates the State to provide meaningful backward-looking relief to rectify any unconstitutional deprivation." McKesson, 496 U.S. at 31, 110 S. Ct. at 2247. Although we do not decide the present case on Due Process grounds, we nevertheless conclude that McKesson bars the defendants from arguing that the financial cost of a constitutional remedy constitutes a justification for withholding that remedy.

The Supreme Court in McKesson explicitly rejected Florida's "equitable considerations," including the argument that the cost of the tax refund justified the court's withholding of such relief. In response to this argument, the Supreme Court stated:

We reject respondents' intimation that the cost of any refund considered by the State might justify a decision to withhold it. Just as a State may not object to another wise available remedy providing for the return of real property unlawfully taken or criminal fines unlawfully imposed simply because it finds the property or moneys useful, so also Florida cannot object to a refund here just because it has other ideas about how to spend the funds.

Id. at 51, 110 S. Ct. at 2257. The Supreme Court's reasoning in McKesson applies equally to the defendants' argument in this case. The enjoining of flow control in New Jersey will divert local revenue from local waste disposal facilities. The local authorities need revenue to service the disposal facilities' debt. This need does not, however, justify the State and the County Authorities' perpetuation of an unconstitutional law at the expense of out-of-state waste disposal facilities, which have been denied access to New Jersey's waste disposal market. Just as "revenue generation is not a local interest that can justify discrimination against interstate commerce[,]" revenue generation in and of itself cannot justify court ordered perpetuation of an unconstitutional law. Carbone, 511 U.S. at 393, 114 S. Ct. at 1684. The cost[27 ELR 21108] of lifting flow control in New Jersey cannot support the district court's "discretion" to impose a two-year stay.²⁸

28. We do not find dispositive the fact that the Florida Supreme Court in McKesson withheld relief, while the district court in this case simply delayed its relief for two years. Either way, the plaintiffs are forced to suffer the results that accrue from the enforcement of a law that concededly violates the Commerce Clause. Nor have we found any case, involving solely the financial impact of rectifying a constitutional violation, where a delay in remedy is permitted on that ground alone.

29. Chevron Oil listed three factors for a court's consideration: first, whether the decision to be applied established a "new principle of law"; second, whether application of the new rule retroactively would "further or retard its application"; and third, whether the decision would create "inequitable results" if applied retroactively to the parties before the court. Chevron Oil, 404 U.S. at 106-107, 92 S. Ct. at 355.

30. Judge Roth would point out that Hyde itself suggests that reliance interests, by themselves, may not support a court's withholding of remedial relief. "If Harper has anything more than symbolic significance, how could virtually identical reliance, without more, prove sufficient to permit a virtually identical denial [of relief] because it is characterized as a denial based on 'remedy' rather than 'non-retroactivity'?" Hyde, 514 U.S. at __, 115 S. Ct. at 1749 (criticizing argument that reliance interests may support withholding of remedial relief).

31. We do note, however, that the Supreme Court's latest retroactivity decisions remain relevant to our analysis of the district court's stay insofar as they demonstrate that financial expense, by itself, cannot serve as a reason for denying constitutional relief.

32. The clerk is directed to enter our order and injunction as follows:

IT IS HEREBY ORDERED AND DECREED:

1. Final judgment is hereby entered in favor of plaintiffs and against defendants, declaring that New Jersey's waste flow control regulations are unconstitutional insofar as they discriminate against out-of-state operators of waste-disposal facilities.

2. The defendants, their agents, servants, employees, designees, and assigns, are enjoined from enforcing those provisions of New Jersey Administrative Code § 7:26-6.5 which, by designating in-state facilities as the sole providers of disposal and processing services, discriminate against out-of-state operators of waste-disposal facilities. This injunction shall not apply to those limited portions of N.J.A.C. § 7:26-6.5 that permit the disposal of particular types of waste with out-of-state facilities. See, e.g., N.J.A.C. §§ 7:26-6.5(b)(1)(i), 6.5(d)(2)(i), 6.5(u)(6).

3. Insofar as the defendants must select and contract with waste disposal facilities pursuant to N.J.A.C. §§ 7:26-6.6 and 6.7 in order to comply with the provisions of this injunction, they are permanently enjoined from implementing New Jersey's self-sufficiency policy as mandated under the State Plan by abrogating existing valid contracts or rejecting or foreshortening contracts submitted to the New Jersey Department of Environmental Protection for review.

4. This injunction does not bar the enforcement of the remaining portions of either the Solid Waste Utility Control Act, N.J.S.A. §§ 48:13A-1 et seq., or the Solid Waste Management Act, N.J.S.A. §§ 13:1E-1 et seq.

5. The district court's two-year post-appeal stay is reversed.

6. This injunction will be stayed, and become effective only, upon the exhaustion or passage of time for all appeals, or denial of petitions for certiorari by the Supreme Court of the United States, or by the United States Supreme Court's final decision in this case affirming this court's judgment.

7. As so modified, the judgment of the district court will be affirmed.

27 ELR 21099 | Environmental Law Reporter | copyright © 1997 | All rights reserved