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Sandlands v. Horry County, No. 13-1134

Decided: December 3, 2013

The Fourth Circuit affirmed the district court’s grant of summary judgment in favor of Horry County, thereby validating its Flow Control Ordinance that prohibits disposal of waste generated in Horry County at any site other than a designated publicly owned landfill.

Horry County occupies the northernmost coast section of South Carolina and landfill waste disposal there has been expensive and difficult. Consequently, in 1990 the County Council established the Horry County Solid Waste Authority, Inc. (“SWA”), a nonprofit corporation, to manage the county’s solid waste. The SWA is a public entity, which owns and operates two landfills and a recycling facility in Horry County. The SWA charges haulers and others who use its landfills “tipping fees” based on the tonnage of trash deposited, which provides revenue to fund SWA operations. Haulers who recycle a specified percentage of the waste they collect pay a reduced tipping fee through an application-based recycling incentive program. On March 17, 2009, the Horry County Council enacted Ordinance 02-09 to create a county-wide plan for solid waste disposal. It has been largely successful in ensuring that waste generated in Horry County is deposited at an approved landfill within the county. The remaining 1,844 tons of waste were taken to four landfills outside of the county, most of which was not “acceptable waste” under the Flow Control Ordinance—in other words, it was waste that the SWA landfills could not process. The enactment of the Ordinance altered the local economy of waste management. For example, Sandlands, which operates a private landfill for C&D waste in neighboring Marion County, South Carolina saw a significant decrease in its business. As an alternate business strategy, Sandlands attempted to open a facility to process recovered materials at its Marion County site, where it would have sorted general C&D debris into recyclable materials and landfill-ready waste. When Sandlands requested permission from Horry County to remove mixed C&D debris for this purpose, a representative from the Horry County Attorney’s Office responded that debris containing non-separated materials is still solid waste subject to the requirements of the ordinance.

On appeal, appellants argued that the Flow Control Ordinance violates the Equal Protection Clauses of the United States and South Carolina Constitutions, the Commerce Clause of the United States Constitution, and the Contract Clauses of the United States and South Carolina Constitutions.

The appellants first argued that there was a Commerce Clause violation and a Dormant Commerce Clause violation. The Fourth Circuit explained that a Dormant Commerce Clause violation will exist where a restriction on commerce is discriminatory—that is, it benefits in-state economic interests while burdening out-of-state economic interests. In United Haulers, the Supreme Court upheld flow control ordinances remarkably similar to the one at issue here, requiring haulers to bring waste to facilities owned and operated by a state-created public benefit corporation. Under United Haulers, the court must first determine whether the Flow Control Ordinance discriminates against interstate commerce. In United Haulers, the Court determined that flow control ordinances favoring the government while treating in-state private business interests exactly the same as out-of-state ones do not discriminate against interstate commerce. Like the ordinances in United Haulers, the Horry County Flow Control Ordinance benefits a clearly public facility. Because trash disposal is a traditional function of local government, county waste-management ordinances can permissibly distinguish between private and public facilities. However, the ordinance must treat all private businesses alike. Therefore, contrary to Appellants’ argument, the question was whether Sandlands has been treated differently from other private businesses – not other public entities. In addition, because appellants had not been treated differently from other private businesses, Horry County had not discriminated against them by prohibiting them from processing and sorting mixtures of acceptable waste and recyclables at their facility in Marion County.

Because the Flow Control Ordinance was not discriminatory, the Fourth Circuit then considered its burdens and benefits under Pike. In Pike, the Supreme Court held that if a “statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” Again pointing United Haulers, the Court there held that flow control ordinances do address a legitimate local public interest. It did not decide whether the ordinances imposed any incidental burden on interstate commerce because it found that any arguable burden does not exceed the public benefits of the ordinances. The same analysis was applicable to the Horry County Flow Ordinance because it clearly conferred public benefits that outweigh any conceivable burden on interstate commerce. To begin, the Ordinance had only an arguable effect on interstate commerce, even if it did affect intrastate commerce to some degree. In addition, it produces the same benefits that the Supreme Court recognized in United Haulers. Moreover, the Ordinance’s waste-management program was a quintessential exercise of local police power. And finally, the ordinance created a revenue stream through which the county supports waste management, recycling programs, and its 911 calling system.

The Fourth Circuit also rejected appellants’ argument that summary judgment was not appropriate because a factual dispute existed about whether the Ordinance discriminated against interstate commerce. The record revealed no disputes of material fact.

Finally, the Fourth Circuit rejected Appellants’ Equal Protection Clause claim. To succeed on such claims, the Appellants had to first demonstrate that it had been treated differently from others similarly situated and that the unequal treatment was the result of intentional or purposeful discrimination. If a party can make that initial showing, the court analyzes the disparity under an appropriate level of scrutiny. However, the Fourth Circuit did not reach that level of analysis because Sandlands and EDS failed to show that they were intentionally treated differently from other similarly situated companies.

Full Opinion

– Sarah Bishop