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Swin Resource Systems Inc. v. Lycoming County

filed: August 25, 1989; As Corrected October 6, 1989.


On Appeal from the United States District Court for the Middle District of Pennsylvania, D.C. Civil No. 87-1565.

Author: Becker


BECKER, Circuit Judge.

Plaintiff-appellant Swin Resource Systems, Inc. ("Swin") owns and operates a solid waste processing facility in Hemlock Township, Columbia County, Pennsylvania. Defendant-appellee Lycoming County ("Lycoming"), a Pennsylvania county, operates a landfill in Brady Township, in Lycoming. The case at bar arises from Lycoming's decision to charge a lower rate for the reception and disposal of waste generated within Lycoming and nearby counties than for waste generated outside that area. In its complaint filed in the Middle District of Pennsylvania, Swin contended that this price difference violated the commerce clause by impermissibly interfering with and discriminating against interstate commerce, denied Swin equal protection of the laws and due process of law, violated a federal land leasing statute (43 U.S.C. § 931c (1982)), and constituted a breach of contract. Named as defendants were Lycoming and various county officials.

The defendants moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). With respect to the commerce clause claim, the defendants asserted that the marketing practices of the county-operated landfill fall within the protection of the so-called market-participant doctrine and hence escape scrutiny under the commerce clause. With respect to the equal protection claim, the defendants asserted that Lycoming's pricing scheme was rationally related to the legitimate purpose of presuming landfill capacity for local waste. With respect to the federal statutory claim, the defendants contended that the statute did not give rise to a private right of action.

The district court, in an opinion reported at 678 F. Supp. 1116 (M.D.Pa 1988), agreed with the position of defendants and held that Swin's federal claims (both constitutional and statutory) failed to state a claim upon which relief can be granted. It therefore dismissed these claims pursuant to Fed.R.Civ.P. 12(b)(6). It also dismissed the pendent state breach of contract claim for want of jurisdiction. Swin then filed a motion under Fed.R.Civ.P. 59(e) to alter or amend the judgment and an alternative motion under Fed.R.Civ.P. 62(c) for an injunction pending appeal. Swin did not seek leave by this motion or otherwise to amend its complaint in order to present additional facts or theories in support of its claims. Swin did, however, attach to its motion papers a deposition of a county employee associated with the initiation and operation of the landfill supplying additional factual data.

The district court denied Swin's motions, and Swin appealed from the district court's order refusing to alter or amend the judgment. A timely appeal from a denial of a Rule 59 motion to alter or amend the judgment also "'brings up the underlying judgment for review.'" Federal Kemper Insurance Co. v. Rauscher, 807 F.2d 345, 348 (3d Cir. 1986) (citation omitted).

In deciding (and reviewing) a motion to dismiss for failure to state a claim upon which relief can be granted, a court must accept as true the factual allegations in the complaint and all reasonable inferences that can be drawn therefrom. The complaint may be dismissed "only if it is certain that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984). Facts contained in the deposition that Swin submitted must not be considered if they fall outside the ambit of the complaint. See Biesenbach v. Guenther, 588 F.2d 400, 402 (3d Cir. 1978). We will consider the facts stated in the deposition, to the extent that they fall within the ambit of the complaint, as illustrative of those facts which Swin could prove if its complaint were reinstated.

On appeal Swin has abandoned its due process and pendent state claims. We are therefore faced with three questions: (1) whether the marketing practices of the county-operated landfill fall within the market participant doctrine and hence escape scrutiny under the commerce clause; (2) whether these marketing practices violate the equal protection clause; and (3) whether the federal land leasing statute creates a private right of action in Swin's favor. For the reasons that follow, we will affirm.


A. Swin's Complaint

On June 5, 1973, the United States Bureau of Prisons granted a thirty-year permit to Lycoming to operate a public landfill on a 130-acre parcel on the federal prison reservation in Allenwood, Pennsylvania. The permit required Lycoming to pay all expenses associated with operating the landfill and to dispose of certain Bureau of Prisons waste without charge. In May 1974, Lycoming applied for and subsequently received a grant from the Appalachian Regional Commission in connection with the construction and operation of the landfill. The county opened the landfill in 1978 and has continued to operate it since that time through the Lycoming County Solid Waste Department.

Swin's waste processing facility receives solid waste from Eastern Pennsylvania and New Jersey. Swin recycles some of the waste and sells it to businesses in several states. The remaining waste is compacted into bales and transported to landfills for disposal. Swin can produce 30 tons per hour of this baled solid waste and is presently producing an average of 300 tons per day.

On March 6, 1986, Lycoming notified Swin by letter that it would accept Swin's baled solid waste for a price in the "range of" $10 per ton, promising to give Swin the exact price after the completion of a waste study within the next month. The letter also indicated that higher rates applied to waste generated outside an area comprised of Lycoming, Union, Snyder, Northumberland, and Montour Counties and part of Columbia County, the other five counties being in the vicinity of Lycoming. Lycoming had apparently regarded Swin's baled waste as originating from within the 5 1/2-county area, since from November 1986 to January 1987 it accepted Swin's baled waste at the reduced rate. The landfill has sufficient capacity to serve the needs of both the 5 1/2-county area and Swin during the term of the thirty-year Bureau of Prisons lease.

Beginning in January 1987, however, and continuing until September 14, 1987, Lycoming charged Swin $10 per ton for waste generated within Lycoming, $13.25 per ton for waste generated within the remaining counties of the 5 1/2-county area, and $17.20 per ton (less $1.50 for unloading) for waste generated outside the 5 1/2-county area. In March 1987, Lycoming instructed Swin to reduce the volume of waste it delivered to the landfill until a new field was "on line." Swin accordingly reduced its deliveries to 100 tons per day. Because of this volume limitation, Swin was compelled to scale back its business operations substantially, as other waste disposal sites were scarce, more distant, and more costly.

Effective September 14, 1987, Lycoming raised the rate for solid waste originating outside the 5 1/2-county area to $30 per ton. Lycoming did not raise the $10 and $13.25 per ton rates for waste originating within the 5 1/2-county area. Lycoming charged Swin the $30 per ton rate and limited Swin indefinitely to delivering 100 tons per day. Under these conditions, Swin cannot economically use the Lycoming landfill, and it is no longer hauling waste there.

B. The Deposition Attached to Swin's Post-Judgment Motions

Swin submitted the deposition of Jerry Walls, the longtime Executive Director of the Lycoming County Planning Commission, the functions of which include planning how Lycoming residents are to dispose of their solid waste. According to the deposition, Lycoming received $1.3 million from the Appalachian Regional Commission to assist Lycoming in the construction of the landfill.

Walls describes the recycling system Lycoming has implemented to reduce the waste flow into the landfill. He testified that there were approximately nine to ten years of capacity left in the landfill. In addition, Walls describes the steps Lycoming took to ensure that enough municipalities used its landfill to enable Lycoming to pay back the landfill's long-term indebtedness with user revenues. The Planning Commission developed a model municipal ordinance (subsequently adopted by a number of Lycoming municapalities) that permitted Lycoming to designate the landfill (or transfer station) to which a municipality's waste haulers brought the waste they collected. Lycoming also entered into long-term disposal contracts with a number of municipalities.


The commerce clause grants Congress the power "[to] regulate Commerce among the several States. . . . "U.S.Const. Art. I, § 8, cl. 3. The Supreme Court, however, has long interpreted the clause to prohibit states from taking certain actions respecting interstate commerce even absent congressional action. See, e.g., Cooley v. Board of Wardens, 53 U.S. (12 How.) 298, 319 (1852). The commerce clause has been so construed in order to preserve "our national solidarity" by preventing the "rivalries and reprisals that were meant to be averted by subjecting commerce between the states to the power of the nation," Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 522-23, 79 L. Ed. 1032, 55 S. Ct. 497 (1935); to promote "[the] material success that has come to inhabitants of the states which make up this federal free trade unit," H.P. Hood & Sons Inc. v. DuMond, 336 U.S. 525, 538, 69 S. Ct. 657, 93 L. Ed. 865 (1949); and in recognition that "when the regulation is of such a character that its burden falls principally upon those without the state, legislative action is not likely to be subjected to those political restraints which are normally exerted on legislation where it affects adversely some interests within the state," South Carolina State Highway Department v. Barnwell Brothers, Inc., 303 U.S. 177, 185 n. 2, 82 L. Ed. 734, 58 S. Ct. 510 (1938).

A. The Market Participant Doctrine

Swin contends that Lycoming's attempt to preserve its landfill's capacity for local residents by charging a higher price to dispose of distant waste in the landfill (and limiting the volume of distant waste accepted by the landfill) constitutes an impermissible interference with and discrimination against interstate commerce in violation of the commerce clause. The district court granted the defendants' motion to dismiss the commerce clause claim on the ground that Lycoming had acted as a market participant." Under the market participant doctrine, a state or state subdivision that acts as a market participant rather than a market regulator "is not subject to the restraints of the Commerce Clause." White v. Massachusetts Council of Construction Employers, Inc., 460 U.S. 204, 208, 75 L. Ed. 2d 1, 103 S. Ct. 1042 (1983).

Application of the distinction between "market participant" and "market regulator" has, however, occasioned Considerable dispute in the Supreme Court's jurisprudence. The author of each of the three opinions that applied the doctrine -- Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 49 L. Ed. 2d 220, 96 S. Ct. 2488 (1976) (Powell, J.); Reeves, Inc. v. Stake, 447 U.S. 429, 65 L. Ed. 2d 244, 100 S. Ct. 2271 (1980) (Blackmun, J.); White, 460 U.S. 204, 75 L. Ed. 2d 1, 103 S. Ct. 1042 (Rehnquist, J.) -- authored a dissent in the next, the pattern being maintained by Justice Rehnquist's dissent in South-Central Timber Development, Inc. v. Wunnicke, 467 U.S. 82, 101, 81 L. Ed. 2d 71, 104 S. Ct. 2237 (1984), the principal case in which application of the doctrine resulted in a conclusion that the state was not a market participant. The Court has expressly reserved the question whether state operation of a landfill may fall within the market participant doctrine. See City of Philadelphia v. New Jersey, 437 U.S. 617, 627 n. 6, 57 L. Ed. 2d 475, 98 S. Ct. 2531 (1978).

For the reasons explained below, we hold that Lycoming County acted as a market participant rather than a market regulator in deciding the conditions under which Swin could use its landfill. It is useful to begin our analysis with a review of the four principal market participant cases.

In Alexandria Scrap, the Supreme Court upheld Maryland's statutory scheme to rid the state of derelict automobiles, even though the scheme entailed two types of discrimination: (1) Maryland paid bounties to in-state scrap auto hulk processors while refusing to pay bounties to out-of-state processors on the same terms, and (2) Maryland paid bounties only for vehicles formerly titled in Maryland. 426 U.S. at 797, 801. The Court held that the statutory scheme was consistent with the commerce clause on the ground that Maryland was participating in the market rather than regulating it. Id. at 809-10. As the majority put it, "[nothing] in the purposes animating the Commerce Clause prohibits a State, in the absence of congressional action, from participating in the market and exercising the right to favor its own citizens over others." Id. at 810 (footnotes omitted).

In Reeves, the Court upheld a South Dakota policy of confining the sale of cement by a state-operated cement plant to residents of South Dakota in order to meet their demand during a "'serious cement shortage.'" 447 U.S. at 432. The Court affirmed "[the] basic distinction drawn in Alexandria Scrap between States as market participants and States as market regulators" and concluded that "South Dakota, as a seller of cement, unquestionably fits the 'market participant' label." Id. at 436, 440. The Court upheld the South Dakota policy even though Reeves, a Wyoming corporation that had purchased about 95% of its ...

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