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ATLANTIC COAST DEMOLITION v. BOARD OF CHOSEN FREEH

July 15, 1996

ATLANTIC COAST DEMOLITION & RECYCLING, INC., et al., Plaintiffs,
v.
BOARD OF CHOSEN FREEHOLDERS OF ATLANTIC COUNTY, et al., Defendants.



The opinion of the court was delivered by: IRENAS

 IRENAS, District Judge:

 I. PROCEDURAL HISTORY

 Plaintiffs here come from two consolidated cases, Atlantic Coast Demolition & Recycling, Inc., v. Board of Chosen Freeholders, et al., Civ. No. 93-2669 (JEI) ("Atlantic Coast"), and C & A Carbone, et al. v. Shinn, et al., Civ. No. 94-3244 (JEI) ("Carbone II"). The Atlantic Coast case was filed on June 23, 1993, by Atlantic Coast Demolition & Recycling, Inc. ("Atlantic Coast") against the Commissioner of the New Jersey Department of Environmental Protection and Energy (the "State" or "DEP"), the Board of Chosen Freeholders of Atlantic County, the Atlantic City Utilities Authority, the Board of Chosen Freeholders of Camden County, and the Pollution Control Financing Authority of Camden County. Atlantic Coast brought claims pursuant to the Commerce Clause and 42 U.S.C. § 1983 seeking 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.

 Atlantic Coast moved for a temporary restraining order, and on September 2, 1993, after a period of intensive discovery, the Court held a hearing on the motion. On September 8, 1993, the Court rendered its oral findings of fact and conclusions of law. In light of the Third Circuit's decision in J. Filiberto Sanitation, Inc. v. New Jersey Dep't of Envtl. Protection, 857 F.2d 913 (3d Cir. 1988), the Court concluded that the waste flow regulations should be analyzed under the balancing test articulated in Pike v. Bruce Church, Inc., 397 U.S. 137, 25 L. Ed. 2d 174, 90 S. Ct. 844 (1970), and that the state interest served by the waste flow regulations outweighed any burden on interstate commerce. The Court therefore denied Atlantic Coast's application for a temporary restraining order. On September 10, 1993, the Court granted the motion of the Mercer County Improvement Authority and the Gloucester County Improvement Authority for leave to appear as amicus curiae. On February 28, 1994, with the consent of the parties, the Court entered final judgment in defendants' favor on the basis of its prior findings of fact and conclusions of law.

 Plaintiff appealed. In an opinion filed February 16, 1995, the Third Circuit reversed this Court's decision and remanded the case for further proceedings. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders, 48 F.3d 701 (3d Cir. 1995). The Third Circuit concluded that in light of the Supreme Court's recent decision in C & A Carbone, Inc. v. Clarkstown, 511 U.S. 383, 128 L. Ed. 2d 399, 114 S. Ct. 1677 (1994) ("Carbone I"), which was decided after this Court's entry of final judgment, New Jersey's waste flow regulations discriminate against interstate commerce and are subject to heightened scrutiny under the dormant Commerce Clause rather than the less strict Pike balancing test. 48 F.3d at 713. However, the Circuit also held that it would remand the matter to the district court to determine whether the regulations could be upheld under strict scrutiny. Id. at 718. In doing so, the Circuit specifically stated that "Atlantic Coast is free at any time to apply for pendente lite relief." Id.

 Carbone II was filed on July 11, 1994, and assigned to the Newark vicinage. The case was brought by C & A Carbone, Inc., the National Solid Waste Management Association, and the Waste Management Association of New Jersey (the "association plaintiffs"), and the mayors of Jersey City and Northvale (the "municipal plaintiffs"), against the State, Bergen County Utilities Authority ("BCUA"), Bergen County Health Department, Hudson County Improvement Authority, and officials at these agencies. The case, which raised essentially the same challenges to the New Jersey waste flow regulations as those brought in Atlantic Coast, but which sought damages as well as declaratory and injunctive relief, was stayed pending the Third Circuit's decision in Atlantic Coast. When that case was remanded, Carbone II was transferred to this Court. On April 12, 1995, this Court granted defendants' motion to consolidate the case with Atlantic Coast. On April 17, 1995, the association plaintiffs and the municipal plaintiffs in Carbone II moved for pendente lite relief.

 The Court indicated that it would exercise its discretion "to reopen the record for supplementary evidence," 48 F.3d at 718 n.21, in relation to the motions for a preliminary injunction, but the parties elected to Proceed on the basis of the previous record before this Court and the briefs, exhibits, and affidavits submitted in connection with the preliminary injunction motions and defendants' response thereto. The Carbone II plaintiffs filed an amended complaint on May 25, 1995, in which they added additional municipal plaintiffs. The Court held oral argument on the motions on June 6, 1995, and issued a conditional preliminary injunction on June 9, 1995, only as to the flow control of C&D waste. Atlantic Coast, 893 F. Supp. 301 (D.N.J. 1995). The Court concluded that a preliminary injunction banning the entire present waste flow regulatory scheme was not warranted at the time due to the substantial harm such an injunction would cause to the defendants and the public. In its order conditionally granting only plaintiff Atlantic Coast's motion for a preliminary injunction, the Court dismissed the municipal Plaintiffs from the case.

 The State was given additional time to submit an alternative plan for the control of C&D waste in New Jersey. After the State had submitted such a plan, and all parties had been given an opportunity to comment, the Court held oral argument on November 6, 1995. On November 28, 1995, the Court granted the motion for pendente lite relief as to C&D waste and issued a preliminary injunction subject to implementation by the State of the alternative plan for the control of C&D waste. Atlantic Coast, 909 F. Supp. 229 (D.N.J. 1995). The State was given sixty days to implement the plan. The Court also denied plaintiffs' motion for summary judgment, and held that defendants could consider financial concerns as a legitimate local interest in the formulation of an alternative waste disposal system.

 On December 11, 1995, the Court granted the motion of the Mayors Task Force to appear as amicus curiae. William P. Schuber and Mark Guarino were dismissed as defendants in this consolidated case on December 22, 1995, by stipulation of the parties.

 The non-jury trial on the merits took place on May 6, 1996. At the outset, the Court denied plaintiffs' motion for attorney's fees, without prejudice to a later renewal of the motion. Direct testimony was submitted in advance and the parties were given the opportunity to cross-examine witnesses in Court, although no party did so. The parties submitted proposed findings of fact and conclusions of law, as well as pre- and post-trial briefs. Plaintiffs now seek an injunction against the current flow control regulations to the extent these regulations discriminate against interstate commerce.

 A. The Carbone Decision

 In C & A Carbone, Inc. v. Town of Clarkstown, N.Y., 511 U.S. 383, 128 L. Ed. 2d 399, 114 S. Ct. 1677 (1994) ("Carbone I"), the Supreme Court held that the waste flow control ordinance of Clarkstown, New York violated the Commerce Clause. The Supreme Court held that, "discrimination against interstate commerce in favor of local business or investment is per se invalid, 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 local interest. Maine v. Taylor, 477 U.S. 131, 106 S. Ct. 2440, 91 L. Ed. 2d 110 (1986) (upholding Maine's ban on the import of bait fish because Maine had no other way to prevent the spread of parasites and the adulteration of its native fish species)." Carbone I, 114 S. Ct. at 1683.

 The Supreme Court emphasized the need for governments to seek out alternatives which do not discriminate against interstate commerce, and suggested that there are " . . . any number of nondiscriminatory alternatives for addressing the health and environmental problems alleged to justify the ordinance in question. The most obvious would be uniform safety regulations enacted without the object to discriminate." Id. at 1683. Under the Carbone I standard, arguments about the necessity of maintaining a discriminatory flow control scheme "must be rejected absent the clearest showing that the unobstructed flow of interstate commerce itself is unable to solve the local problem." Id. at 1683.

 The Supreme Court rejected the argument that waste must be disposed of locally to avoid out-of-state disposal that might be harmful to the environment. Allowing a bias toward local interests for this reason would essentially be an extension of the governmental entity's police power beyond its jurisdictional bounds. Id. at 1683. The Supreme Court also held that by itself, "revenue generation is not a local interest that can justify discrimination against interstate commerce." Id. at 1684. In addition to its brief discussion on appropriate facts to be addressed in developing waste disposal plans, the Supreme Court opined as to possible alternatives, stating that the "town may subsidize the facility through general taxes or municipal bonds." Id. at 1684.

 B. The Third Circuit Opinions in Atlantic Coast and Harvey & Harvey

 In 1995, the Third Circuit reviewed this Court's opinion denying plaintiff Atlantic Coast's motion for a preliminary injunction. Based on the Carbone I decision, the Circuit overruled this Court's earlier opinion, held that the current waste flow laws as implemented discriminate against interstate commerce, and remanded the case to this Court because it was "apparent from the record that the feasibility and effectiveness of alternative measures pose technologically and economically complex issues" which had not been addressed thoroughly by the parties during the earlier proceedings. Atlantic Coast Demolition & Recycling, Inc. v. Board of Chosen Freeholders, 48 F.3d 701, 718 (3d Cir. 1995). In sum, the Third Circuit found:

 
Because we conclude that the waste flow regulations discriminate against interstate commerce on their face or in effect, and that they are not protected from dormant Commerce Clause scrutiny under the market participant exception, the only remaining question is whether the regulations can survive the heightened scrutiny test. "Once a state law is shown to discriminate against interstate commerce either on its face or in practical effect, the burden falls on the State to demonstrate both that the statute serves a legitimate local purpose, and that this purpose could not be served as well by available nondiscriminatory means."

 Atlantic Coast, 48 F.3d at 717, quoting, Maine v. Taylor, 477 U.S. 131, 138, 91 L. Ed. 2d 110, 106 S. Ct. 2440 (1986). Discussing its Atlantic Coast holding in a subsequent case, the Third Circuit concluded: "In interpreting Carbone, therefore, Atlantic Coast did not consider all flow control ordinances to be per se discriminatory (and consequently subject to strict scrutiny analysis). Instead, we focused on the process, and invalidated a scheme in which the process discriminated against out-of-state facilities." Harvey & Harvey Inc. v. County of Chester, 68 F.3d 788, 801 (3d Cir. 1995), cert. denied, 134 L. Ed. 2d 213, 116 S. Ct. 1265 (1996).

 The County Authorities argue, as does BCUA, that Harvey demonstrates that the Third Circuit opinion in Atlantic Coast should not be read as a determination that New Jersey's system of designating service utility providers to supply solid waste disposal services is inherently discriminatory. Accordingly, the defendant Authorities suggest that "the task this Court faces on remand is to decide if the non-legislatively mandated policy goal of the State to ultimately require in-state self-sufficiency in solid waste disposal, in light of the operative facts, passes the test of strict scrutiny set forth in Maine v. Taylor." Post-Trial Brief of County Authorities, at 3-4. On remand, the Court will not consider whether the waste flow control system is or is not discriminatory, on a state-wide level or on a district-by-district analysis. The Third Circuit found the system to be discriminatory, and the Court will not revisit the holding. *fn3" Rather, the Court here must consider (1) whether there are legitimate local purposes addressed by the waste management statutes, and (2) whether these purposes can be served as well by a nondiscriminatory alternative.

 III. FINDINGS OF FACT

 The Court hereby adopts the Findings of Fact incorporated in its Opinion issued June 9, 1995, which incorporated by reference its Findings of Fact Numbered One through Twenty-Six of its oral Opinion rendered September 8, 1993, and the Third Circuit's detailed discussion of the New Jersey solid waste management system and Atlantic Coast's activities. The Court also adopts the factual discussion in its Opinion dated November 28, 1995. Pursuant to Fed. R. Civ. P. 52, the Court makes the following additional findings of fact based on depositions, certifications, affidavits, and exhibits submitted by the parties in conjunction with the non-jury trial held on May 6, 1996. These findings address the purposes behind New Jersey's solid waste management system and the existence of alternatives to the current waste flow system.

 A. Local Purposes Behind the Waste Flow Regulations

 1. The purposes behind the current statewide solid waste management system are: (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 governmental entities. See, e.g., Defendant DEP's Exhibits 36, 37, and 39, Sondermeyer Certs.; Defendant DEP's Exhibit 69, United States District Court Mandated Plan and Impact Study (8/8/95) ("Mandated Plan").

 B. The Current System in New Jersey

 3. The SWMA required the development of a statewide solid waste management plan as well as individual plans for each district. N.J.S.A. 13:1E-21. The twenty-two waste management districts in New Jersey developed waste flow plans in accordance with state laws and regulations. New Jersey's system has resulted in the operation of 12 state-of-the-art landfills and 5 energy recovery incinerators. These facilities have been designed to provide suitable capacity into the next century for the solid waste generated within each respective service area. Defendant DEP's Exhibit 39, Sondermeyer Cert. (12/3/95) at P69.

 4. Most districts created an authority with the power to acquire, construct, operate, or contract for the operation of facilities for the collection, transportation, processing, recycling, and disposal of solid waste generated within the district in an environmentally sound manner. Among the twenty-two districts, there are eleven utilities authorities, four improvement authorities, two pollution control financing authorities, and five counties with direct control. Defendant DEP's Exhibit 13, Gates Cert. at P4. The authorities typically were granted, transferred, and assigned the rights, title, and interests of the counties in and under any agreements, documents, regulatory orders and/or moneys relating to management of solid waste. The authorities supervise district solid waste systems which include: (i) facilities to process processible waste; (ii) transfer stations to process non-processible waste and other solid waste; (iii) contracts for transportation and disposal of ash residue produced by the facilities at landfills located outside New Jersey; (iv) programs for re-use, recycling, and source reduction of solid waste generated in-district; (v) fuel-quality assurance programs; and/or (vi) programs for collection, recycling, or disposal of household hazardous waste.

 5. In conformity with the Legislature's mandate, and in legitimate reliance upon the judicial findings of the lawfulness of the system, the defendants Essex County Utilities Authority, Hudson County Improvement Authority, Mercer County Improvement Authority, and Passaic County Utilities Authority, after substantial public and governmental debate and participation, planned, constructed and put into operation comprehensive and integrated systems and facilities, executed contracts and lawfully incurred debt obligations designed to assure the safe and efficient disposal of solid waste generated in their districts. County Authorities' Proposed Findings of Fact.

 6. In 1991, the last year for which data are available, New Jersey generators disposed of 7.1 million tons of solid waste Of this waste, 4.4 million tons were disposed of in-state and 2.7 million tons were disposed of out-of-state after being processed at an in-state facility. Plaintiffs' Exhibit 21, NJDEP solid Waste Management State Plan Update (1993-2002), Executive Summary at 16, 46-47. It is estimated that less than two million tons per year are now exported from New Jersey. Defendant DEP's Exhibit 39, Sondermeyer Cert. (12/3/95) at P69.

 7. Due to the State's stringent environmental standards, extensive public hearings, and the need for funding, the creation of state-of-the-art facilities for waste can take up to several years. Defendant DEP's Exhibit 10, Ciolek Cert. at P14; Defendant DEP's Exhibit 49, Castner Dep. at 17-19.

 8. The development of resource recovery facilities was deemed historically by the State to be of vital importance to its paramount goal of assuring safe and adequate disposal of waste over the long-term, which the private industry had not been able to accomplish. Resource recovery facilities, as used in this context, are essentially electric power plants fueled by garbage and used to generate electricity for homes, business and industry. Defendant DEP's Exhibit 1, Auerbacher Cert., Exhibit K, I/M/O Resource Recovery Generic Proceeding, Decision and Order, BPU Dkt. No. 833-236 (2/23/84) (hereinafter referred to as "RRF Generic Order"). Such facilities operate most efficiently when they receive a steady stream of waste. Defendant DEP's Exhibit 39, Sondermeyer Cert. (12/3/95) at P54.

 9. New Jersey has established recycling goals of 50% of the municipal waste stream and 60% of the total waste stream by December 31, 1995, and it is well on its way to achieving those goals, having recycled over 50% of the total waste stream by December 31, 1993. Defendant DEP's Exhibit 42, Watson Cert. at PP 6-7. An integrated waste management system and fee structure encourages recycling and long-term reduction of waste. Defendant DEP's Exhibit 42, Watson Cert. at P 18; Defendant DEP's Exhibits 61-62, Watson Dep. at 41:22-43:17, 49:4-53:23; Defendant DEP's Exhibit 69, Mandated Plan at 29-39; Defendant DEP's Exhibit 59, Sondermeyer Dep. (10/27/95) at 69:10-70:1, 107:17-108:17, and 177:17-178:20.

 10. New Jersey's recycling programs have been successful in part because of the predictability of the marketplace and the economic incentives to recycle that exist under flow control since tipping fees are artificially high and it becomes cheaper to recycle a given amount of material rather than to place that same amount of material in solid waste collection containers for collection and disposal as solid waste. Id. at PP 11-17. The recycling industry in New Jersey will face additional challenges if flow control is eliminated because the companies will have to compete for their raw materials with out-of-state ...


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