Transcript

IN THE SUPREME COURT OF THE UNITED STATES

UNITED HAULERS ASSOCIATION, INC., ET AL., Petitioners v. ONEIDA-HERKIMER SOLID WASTE MANAGEMENT AUTHORITY, ET AL.

Washington, D.C.

January 8, 2006

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:10 a.m.

APPEARANCES: EVAN TAGER, ESQ., Washington, D.C.; on behalf of Petitioners. MICHAEL J. CAHILL, ESQ., Holbrook, N.Y.; on behalf of Respondents. CAITLIN J. HALLIGAN, ESQ., Solicitor General, New York, N.Y.; on behalf of New York, as amicus curiae, supporting Respondents.

P R O C E E D I N G S

(11:10 a.m.)

CHIEF JUSTICE ROBERTS: We'll hear argument next in United Haulers Association versus Oneida-Herkimer Solid Waste Management Authority.

Mr. Tager.

ORAL ARGUMENT OF EVAN TAGER

ON BEHALF OF THE PETITIONERS

MR. TAGER: Thank you, Mr. Chief Justice, and may it please the Court:

The barriers to interstate commerce imposed by the flow control ordinances in this case are even more severe than those resulting from the ordinance this Court struck down in Carbone. As in Carbone, no local waste can leave the counties for processing. In addition, now that Respondent's landfill is up and running no local waste can leave the counties for disposal either. The issue here is whether Carbone is inapplicable to this outright embargo merely because Respondent's own the facilities to which the haulers are required to bring the waste. The answer is no, and the reason is that the concerns underlying the Commerce Clause are implicated whether interstate commerce was being obstructed for the benefit of a public enterprise or a private one. The whole point of the Commerce Clause was to promote the national economy and to put an end to parochial barriers to interstate trade. This Court has consistently held that embargoes, local processing requirements, and other barriers to interstate commerce violate the Commerce Clause because such laws inevitably prompt resentment, retaliation, and ultimately --

JUSTICE BREYER: I guess in many thousands of municipalities throughout the United States it's fairly common to have a locally owned electricity distribution company, or an electrically -- or a gas distribution company. And I thought it was fairly common for a municipally owned pipeline, gas pipeline, or electricity distribution to say, if you live in our town you've got to buy from us; you've got to buy from the local community. And I guess that's been going on for about 110 years.

And yet I've never seen anybody think or write or anything that that violated the Commerce Clause. But of course, there could be somebody in another State who'd like to sell electricity to the people in our town. They can't do it because the town says, we own the company and you got to buy from us.

Now, if we agree with you are we saying that all those gas companies, distribution companies, et cetera, are behaving unconstitutionally?

MR. TAGER: The first point of clarification on that is the question -- the question is does strict scrutiny apply.

JUSTICE BREYER: No, I'm not interested in tests. I'm interested in just the outcome. I just raise the question.

MR. TAGER: Yes. I am not, I am not sure that it's correct that in all of those municipalities you hypothesize that they are actually pairing their provision of local --

JUSTICE BREYER: Well, I used to teach the subject and I can't say you're wrong. But I knew that it was a fairly common thing to have a certification that gave you a -- as a company, it would give them a local area in which they had an exclusive monopoly. And that was common and it was called a service area, and in the local town, the service area, I never even heard of a company trying to come in and sell from abroad, because I thought that this certificate gave them an exclusive right to provide the local electricity service or the natural gas service. I mean, it's a fairly obvious thing. And I might be wrong and I mention that my memory -- I've never focused directly on it. Just everybody I read and everything I read, I assumed the constitutionality of this. But of course, memory is fallible, including mine. Therefore, I raise the question.

MR. TAGER: Well, if the utility is -- if the utility is privately owned --

JUSTICE BREYER: No, no. I'm not talking about that because I guess that would be trying to attack Carbone. Far be it from me.

But I know at least there are these things called municipal gas utilities and municipal electricity companies; and during the New Deal that was thought to be quite a good thing, and that's years ago. In all that time when people were attacking New Deal agencies, I've never seen an attack based on this ground.

MR. TAGER: Well, I think that the same logic would apply as in --

JUSTICE BREYER: Yeah, I think it would. The same logic would apply.

MR. TAGER: And it would apply to all of the cases this Court has ever held. In every single case involving an embargo or a local processing requirement or a local needs requirement, if you just substitute "in public ownership" you'd have the exact same case --

JUSTICE BREYER: Well, the fact is there is a difference between public ownership and giving an exclusive franchise to a public company. And the public ownership means that the people of the State have decided to have their own little nationalized industry, which again people don't like, many. But I never knew there was anything in the Constitution that forbid it.

MR. TAGER: Well, I think that the whole point of the Commerce Clause was to stop these kind of

JUSTICE BREYER: Nationalized industries?

MR. TAGER: Well, to stop the idea that everything can be localized.

CHIEF JUSTICE ROBERTS: Well, but you don't even have to get into the theory. What happens in a lot of municipalities of course is that they decide, well, we're going to run the waste treatment facility and we're going to tax the people in the municipality to support it and the service is going to be free. Now, is that a violation of the Commerce Clause?

MR. TAGER: If they're only providing it for free and not barring you --

CHIEF JUSTICE ROBERTS: Yes.

MR. TAGER: -- from engaging in interstate commerce, in the event, for example, that you found there to be some additional benefit from engaging in an interstate transaction, I think we would have -- the Commerce Clause would be implicated. But as a practical matter, they would be able to accomplish much the same thing because most people would take the free service.

JUSTICE SCALIA: Well, I don't understand. You know, as far as the impact on out of State competitors are concerned, it's exactly the same. The State or the municipality runs its own waste disposal facility. There is no charge for dumping the waste there. The cost of it is entirely covered by taxes. Okay.

Now, the people you're representing, out of state people who would provide dumping grounds for this waste, they would charge 9 dollars a ton or whatever they would charge. It would be more than what the municipality is charging.

Now, why isn't that a restraint on interstate commerce, discrimination against interstate commerce?

MR. TAGER: Well, it's market participation if all they're doing is public collection and bringing it --

JUSTICE SCALIA: Oh, I'm sorry. You have to dump your waste in the municipal garbage dump.

MR. TAGER: If you parrot the Flow Control ordinance I think it's exactly the same.

JUSTICE SCALIA: Okay, so that's fair. Even if they support it entirely by taxes?

MR. TAGER: Yes.

JUSTICE SCALIA: So that they're not competing in the marketplace in any way, they're not getting any money from the people who are dumping garbage. They get money from the whole tax base.

MR. TAGER: The impact on the interstate market is the same, and I think that --

JUSTICE SCALIA: Oh, it is indeed.

MR. TAGER: -- the Court's Commerce Clause --

JUSTICE SCALIA: I didn't think you'd be willing to go that far, but you'd say that that violates the Commerce Clause.

MR. TAGER: But I don't think I -- let me be clear. We don't need to win that case in order to win this case, because in this case --

JUSTICE KENNEDY: Well, I'm not so sure.

MR. TAGER: This case is almost on all fours with Carbone. All you've done is transfer the ownership. As you know, in Carbone that facility was destined to be owned within less than 2 years from the time the Court issued its opinion.

JUSTICE GINSBURG: But in the majority opinion, as opposed to the dissent, at least as I read it, on almost every page it uses words like "local operator," "local enterprise," "local proprietor," "local business," doesn't speak, as the dissent did, about a municipal facility. It seems great care was taken in the majority to not characterize that transfer pledge as a municipal facility.

MR. TAGER: Well, two responses to that, Justice Ginsburg. First, there were other references where the opinion said "the town's facility." Indeed, the Flow Control witness himself referred to it as the town's facility.

And the other response is, to call someone a proprietor doesn't mean that they're private. In this case, they're charging $81 -- or $86 a ton. Every ton that comes in, they make more money.

JUSTICE GINSBURG: I'm sorry. At least as I read the Carbone opinion, it didn't deal with the public-private distinction. It seemed to assume it was a private entrepreneur. And it didn't take a position one way or another whether there would be a distinction.

MR. TAGER: Well, I don't think the Court affirmatively decided the issue. I think the distinction didn't matter to the majority. I think the majority is focusing on the consequences of putting up barriers to interstate commerce, of putting up embargoes and local processing requirements. And you could take almost any one of the Court's cases and just substitute in public ownership. Take, for example --

JUSTICE GINSBURG: But not -- you know, you have a whole string of commercial products, but you have recognized, too, that garbage disposal has for long been considered a municipal responsibility, a municipal function.

And you also say that the total, the -- what is it -- cradle to grave, if the county took over all of the garbage disposal business, the hauling from the garbage generator to the plant, and then there wouldn't be any commerce problem, right? But if it does something less, there is?

MR. TAGER: Well, there were two questions embedded there. Let me see if I can take them in order. The idea that it is a traditional local function, I don't think can support any kind of meaningful test in this case. The Court has rejected that very - that very standard in Garcia and the Tenth Amendment cases, and prior to that in the intergovernmental tax immunity cases, and the reason it did so is it found that it was unworkable to try to determine what is a traditional government function in any particular case. The Court found that it was in a total line-drawing morass. And so it said we're throwing that out.

JUSTICE BREYER: Well, there is still at least the obvious distinction, that one of the main purposes of the dormant Commerce Clause is to prevent protectionism. Protectionism is when a state favors its own producers. And you could see, indeed a big argument in Carbone was, you aren't favoring your own producer; well, we are at least favoring one. But now where the municipality is running it itself, no one is favored.

So I don't think it was an object of the Commerce Clause to prevent a State from favoring its own government.

MR. TAGER: I don't know whether the framers considered it but I do know --

JUSTICE BREYER: Well, it's about --

MR. TAGER: -- protectionism wasn't the only thing that they were concerned about.

JUSTICE BREYER: Well, is there something here that is not protection? Because Carbone was still perhaps viewing it most favorably, an extreme case of protection, only one individual was protected.

MR. TAGER: No. First of all, what was being protected was this plan. The town had to fund its transfer station, a transfer station that it was going to take possession of less than two years after this Court decided the case.

So the protectionism that was going on there was really protection of their investment in their scheme.

JUSTICE SOUTER: But it was also protectionism -- I mean, I didn't agree with this at the time, but I mean there, it -- you have to admit that there was protectionism of the one licensee, the person who constructed the plant and was going to sell it to the town for a dollar. That, so far as we know, that person or that company was in it for the money.

And so for the period of the five years prior to the transfer to the town for the dollar, that particular entity was being protected so it could make money, and therefore, make it worthwhile for that company to sell its, its real estate to the town for a dollar. Surely that entity was being protected handsomely.

MR. TAGER: But it would be equally protected, Your Honor, if the government owned the facility but said you keep all the tipping fees until it's paid off and take a nice profit on top, too.

This distinction --

JUSTICE SOUTER: Well, that's -- that's a third case but that's not the question we have here, is it?

MR. TAGER: Well, the case you have here is are you going to adopt a new formalistic particular distinction between public and private ownership, when in the past this Court has concluded that a lot of these other distinctions were unworkable.

CHIEF JUSTICE ROBERTS: Well, so, you say formalistic as if it's a bad thing. But the, the distinction, say in the First Amendment, if the private contractor the day before the municipality bought the facility for a dollar had fired an employee because of his or her political views, you wouldn't argue that that is state action just because the next day it was going to be controlled by the public entity. And yet the next day, that type of action would be subject to First Amendment scrutiny. It may be a formalistic distinction but in many areas of the law it makes all the difference.

MR. TAGER: Well, I just think you are going to be walking into so many line-drawing problems because if that example is one, are you going to require 100 percent public ownership, or a majority interest, 50-50? Once you go down this road, I think it is just opening up a huge can of worms when the focus ought to be what is the impact on interstate commerce? What we have here now that the landfill is up and running is an absolute embargo. No waste generated in this town, in these counties, excuse me, can leave the State, period, end of story.

It is no different, in effect, it is no less likely to breed resentment and retaliation than --

CHIEF JUSTICE ROBERTS: It is kind of formalistic on the other side because you, I thought you agreed that if the municipality did it through tax revenues and there was no formal flow restriction and yet it only made sense to dump your waste at the free facility, you seem to suggest that would be okay.

MR. TAGER: Well, I'm glad you reminded me of that point. I meant to make it earlier. In West Lynn Creamery this Court said that these kind of things make a difference. There are certain ways you do things and certain ways you can't do things. If you place an embargo, that's traditionally been regarded as subject to strict scrutiny. If you try to do the same thing by making it free and providing public -- public -- public collection, that's okay.

And -- and what the Court cases say is do it the right way and we'll worry about the consequences later.

JUSTICE BREYER: Here, I take it the reason they want to do this is because they wanted their municipal facility to charge a higher price for the non-recyclable rubbish and that will encourage people to segregate the rubbish and thereby have more cyclable -- recyclable rubbish, and therefore overall pay less.

And that's why they want to do it, and of course that's not going to work. If somebody comes in from out of State and charges a lower price for all of the non-recyclable rubbish or you know, for all rubbish, it just won't work. It is rather like electricity, interestingly enough, where municipalities would do the same thing. They want discriminatory rates in order to push out the possibility of poorer people getting electricity. This they want to do the same thing but they want to do it for rubbish, for, to encourage recycling.

MR. TAGER: Several answers to that, Justice Breyer.

One, the same argument was made in Carbone. It doesn't matter who owns the facility.

Two, this is an argument about why they might survive strict scrutiny, it's not a -- I know you don't like hearing about that -- but the question here is do we apply strict scrutiny or not. And that goes to the strength of their interest. And then of course the question turns on, can it be met in nondiscriminatory ways? The answer is "very well." Since Carbone was decided, the municipalities have been living with no flow control, virtually every one in the country, yet recycling has gone up in the, in that intervening period.

Indeed the best way to accomplish recycling is to charge volume-based fees to, to the -- between the haulers and the, and the generators. That's not what is going on here. They're just charging it at the disposal point. So there are plenty of communities all -- excuse me -- plenty of communities all over the country that are charging what's known as a batch fee where you pay for each -- you pay -- you get a label, like you put on a bag; you can't dispose of the bag without the label, the label costs a certain amount of money. None of these people have flow -- none of these communities have flow control but there's a direct straightforward way.

They can also impose regulations directly on the generators and directly on the haulers to make sure they're doing these things. So it is hardly a reason for creating a brand-new public-private distinction.

JUSTICE SOUTER: It sounds to me as though, if we accept your argument that, going back to Justice Breyer's first question, every municipal utility in the United States is going to fall.

MR. TAGER: Well -- I'm not an expert on -- on that industry.

JUSTICE SOUTER: No, but you know, you know that there are plenty of, of communities that don't have municipal utilities and seem to get natural gas. They seem to get electricity. The lights go on. And therefore by parity of reasoning to what we have just heard, there just wouldn't be the justification for, let's say, embargoing the importation of electricity and gas by private entities from outside.

So that if you win on this argument, no more municipal lifelines.

MR. TAGER: I didn't hear the last part.

JUSTICE SOUTER: No more municipal pipelines.

MR. TAGER: Well, I think they can have the plant. They just -- assuming that is --

JUSTICE SOUTER: Well, they'd like to run them as --

MR. TAGER: They'd like to have a monopoly, and --

JUSTICE SOUTER: -- an exclusive monopoly, and in that sense they won't, they won't be around anymore because the Commerce Clause will, will declare them unconstitutional.

MR. TAGER: Well, but that's excluding that -- as I understand it --

JUSTICE SCALIA: You would say that they can do it so long as they charge less than out of State people --

MR. TAGER: Yes.

JUSTICE SCALIA: -- and therefore people buy their services because they're cheaper. So long as they don't prohibit the importation, if they run the municipal facility on tax revenues, and therefore charge very little for the electricity or whatever they're providing, that's perfectly okay for you. Right?

MR. TAGER: Absolutely.

JUSTICE SCALIA: So long as they don't prohibit anybody from out of State.

MR. TAGER: Yes.

JUSTICE SOUTER: Then where does your argument about formalism go? Isn't it a formalistic distinction whether the utility does its financing through or its collection through taxes, or through a user fee?

You said, you said distinctions on -- I thought you said distinctions like that were purely formalistic --

MR. TAGER: Well --

JUSTICE SOUTER: -- for purposes of the Commerce Clause, and therefore the distinction I suppose wouldn't count.

MR. TAGER: Well, I think what I was talking about, the public-private distinction, it is different in kind from saying there are certain kinds of conduct, some kinds of Government conduct that are permissible like a subsidy, for example, take your South-Central Timber versus Wunnicke case. The Court said in that opinion you can't impose contractually on the people who buy the timber the obligation to process it in the State; but what you can do is you can subsidize it, so they can't want to do it. So this is something that has

JUSTICE SOUTER: There's some, then I guess you are saying some formalistic distinctions, some distinctions that don't make any difference economically but are formalistically different are okay.

MR. TAGER: Well, I'm not sure that one is completely formalistic. The Court said there, that gives people a choice. They can still take it out of the State if they want to, and they may have good reason to. Going back to the trash argument, the trash example, you could provide it for free; but a consumer might say, you know what, I'd like to have more days of pickup than you're providing me. Or I think their trucks of this private company are a lot nicer; I'd rather have a van stopping in front of my house than your beaten up municipal truck. So a case like Wunnicke establishes that that's the way it works. That it's okay to have alternatives. What you can't have is forcing people to do this through regulation.

JUSTICE KENNEDY: Well, I -- is there a distinction between the question Justice Breyer put to you, the hypothetical of a municipal electricity company, and this case? In this case you have private haulers, you have private waste dumps at the end, you just have a public, a publicly owned and mandated processing center in the middle.

It would be as if in the electric case you have private electric companies that generate the power, private electric companies that distribute the power, but they all have to go through a Government-owned transformer at the key. It seems that's the case you have here.

MR. TAGER: Yes. That's why --

JUSTICE KENNEDY: But you don't make that, that's not the argument you make.

MR. TAGER: Well, I would --

JUSTICE KENNEDY: At least that's not the way you answered Justice Breyer.

MR. TAGER: I like your answer better, Your Honor. (Laughter.)

MR. TAGER: But what, what I was trying to get back to was --

JUSTICE BREYER: Like it --

JUSTICE KENNEDY: But, but then, but then Justice Breyer is going to say well, you --

MR. TAGER: He'd changed the hypo.

JUSTICE KENNEDY: -- that you, that you can bar it altogether but you can't regulate it just a little bit --

MR. TAGER: You can --

JUSTICE KENNEDY: -- actually is greater than the sum of it.

JUSTICE BREYER: I actually point out that California, I think, wants to own the grid and privatize the rest of it. And there are -- I mean, it -- Justice Kennedy is totally right. There are all kinds of combinations and permutations. There, there could be distributors who are in fact regulated private companies and local distributors who are owned by the city, and I guess there, there is one generator, at least, company that's owned by the -- that's a -- TV -- with TVA. They, they make their own.

So there are all kinds of permutations and combinations. And I think we're getting at, when we take that aspect of the permutation and combination and say that aspect of it which is owned by a Government says: "Our way or the highway." You know, that's what they say. "Buy from us." Period.

And if you're in a certain region, I've always thought they could do that. And I have to admit I never really looked it up; I've just never came across a case that says to the contrary.

MR. TAGER: I, I haven't seen a case either way. It's my, my way of seeing this case law is that there's -- that the rule is simple: if you are doing something to interfere with the free flow of interstate commerce, you're subject to strict scrutiny. And maybe in that situation, maybe it survives strict scrutiny. I don't know that they would in this day and age, when getting, getting gas or other kinds of power to a commercial establishment, for example, is not very difficult and would not necessarily tear up the infrastructure, or whatever. I think they might --

JUSTICE STEVENS: What I guess we really don't know is whether Justice Breyer's parade of horribles are cases in which the municipality was able to provide the service more cheaply if it subsidized it, in which case there's no burden on commerce, or were they accompanied by prohibitions against competition, as Justice Scalia pointed out. I don't know.

MR. TAGER: I think it's hypothetical.

JUSTICE KENNEDY: It's a quite different assumption.

MR. TAGER: I think his hypothetical assumed a ban. But I certainly agree with you, Justice Stevens, that if they do it simply by competing, then that's perfectly acceptable.

JUSTICE KENNEDY: Well, what is your authority for the proposition that we use strict scrutiny?

MR. TAGER: I draw it from the entire line of cases, from the local processing cases, the embargo cases, the local --

JUSTICE KENNEDY: Can you give me one case of it being strict scrutiny?

MR. TAGER: For?

JUSTICE KENNEDY: I mean, I just didn't realize that that phrase entered into our Commerce Clause jurisprudence. Correct me if I'm wrong.

MR. TAGER: Well, I was using it as a synonym for the "virtually per se unconstitutional" rule.

JUSTICE KENNEDY: That is to say, if it discriminates?

MR. TAGER: If it discriminates, or some of the earlier cases didn't use the term --

JUSTICE KENNEDY: But certainly on burden cases we don't require that.

MR. TAGER: Well, not the burden that we talk about in the price context. But in the earlier cases they referred, cases like Minnesota versus Barber and some of the other, earlier cases, refer to it as being burdens on commerce, but clearly what they meant was there are certain kinds of regulations, and I think it's easier to just categorize them, embargoes, local needs requirements, local processing requirements, things likes that, which basically so obstruct interstate commerce as to require the virtual per se rule.

Indeed, Pike itself has that very statement. That's sort of the classic case in which you invoke that high level of scrutiny.

If the Court has no further questions, I'd like to reserve the balance of my time.

CHIEF JUSTICE ROBERTS: Thank you, counsel.

Mr. Cahill.

ORAL ARGUMENT OF MICHAEL J. CAHILL

ON BEHALF OF THE RESPONDENTS

MR. CAHILL: Mr. Chief Justice, and may it please the Court:

No decision of this Court has held that public service is comparable to private enterprise for purposes of dormant Commerce Clause analysis. Here the only entity that benefits from these laws is the government itself.

JUSTICE ALITO: All the local processing cases, would they have come other differently if those facilities -- the milk processing plant, the shrimp processing plant, and so forth -- had been publicly owned?

MR. CAHILL: I think, Your Honor, they would be different. In each of those cases the laws in question operated to protect a private entity or group of entities. In Dean Mills, for instance, it was a group of private milk pasteurizers within a five-mile radius of the town -- the city of Madison. In none of those cases was the government itself engaged in providing the service to the public.

JUSTICE KENNEDY: Well, it might be a good revenue device for the government to say, yeah, let's have our own pasteurizing plant, we'll make it a criminal offense for anybody to use a facility other than ours and we'll charge triple the price.

MR. CAHILL: Your Honor.

JUSTICE KENNEDY: That's not a burden on interstate commerce?

MR. CAHILL: That might be. In our case that is not the case here. What we use is a user fee. We have a limit. There's a limit to a user fee. We can

JUSTICE KENNEDY: Suppose the user fee were ten times what it is?

MR. CAHILL: We can only charge something that's reasonably related to the cost of what, of the service that we provide.

JUSTICE KENNEDY: Why is that?

MR. CAHILL: In Evansville Airport, Your Honor, this Court held that -- versus Delta Airlines -- that a user fee is constitutionally limited; there has to be a relationship between the cost of a service and the amount that's charged.

JUSTICE SCALIA: So don't call it a user fee. Call it something else.

MR. CAHILL: Your Honor, if we --

JUSTICE SCALIA: Call it a tax ripoff. (Laughter.)

JUSTICE SCALIA: Then you can charge whatever you want, so long as you don't call it a user fee, right?

MR. CAHILL: In New York, Your Honor, you either have to call it a user fee or a tax or something else.

CHIEF JUSTICE ROBERTS: Call it a cable TV franchise fee. I mean, isn't that the way municipalities used to make a lot of money? They charged outrageous amounts to give the cable franchise and then grant a monopoly in exchange.

MR. CAHILL: I don't know what cable franchises base their, base their amounts on. I do know that in our case the cost to tip a ton of waste is directly related to the value of the services that we provide to the public.

CHIEF JUSTICE ROBERTS: To get back to the public-private distinction, what is the answer to Mr. Tager's point that that's difficult to -- what if you have a 50 percent publicly owned, 50 percent privately owned company? Is that covered by the Commerce Clause cases or not?

MR. CAHILL: Your Honor, I think that the -- they would not be -- it would not be unconstitutional under the Commerce Clause cases. I think that the distinction is that when government is actually in the transaction, when it's taking the risks, when it's spending public money, when it's providing a service directly to the people, it's a public, it's a public service.

JUSTICE SOUTER: But at the same -- exactly that -- that avoids the problem. At exactly the same time, it's protecting the private 50 percent interest. Why isn't the better answer that in fact that would be subject to Commerce Clause analysis and that would fall, that if the government wants to do this the government's going to do it the way the government's doing it in your case, it's going to be a 100 percent government. If it doesn't, it's protectionism.

MR. CAHILL: Your Honor, I agree with you. We don't have 50 percent ownership. We don't have any private ownership anywhere. There are, however, government agencies in other contexts where there is a private partner. That's a case that isn't here today. But the question was what if there was, and I don't think the answer is automatic one way or the other.

JUSTICE SCALIA: You know, there's a general agreement throughout the world nowadays that sovereign immunity, which usually applies to governments, doesn't apply when the government is engaged in a commercial activity. Now, why shouldn't something similar apply to government regulation which ends up discriminating against out of State businesses, when the government is engaging in a commercial activity it is subject to the restrictions of the Commerce Clause? Why isn't that a reasonable rule?

MR. CAHILL: I think it is a reasonable rule. But I don't think that we're engaging in commercial activity in this particular case. If we were to offer our services to citizens to whom we do not have a governmental responsibility, then I think we're entering into the realm of competition with the private sector.

JUSTICE KENNEDY: Well, I suppose any private entity can choose its market.

MR. CAHILL: Pardon me, Your Honor?

JUSTICE KENNEDY: I suppose any private entity can choose its market. You're a market participant. You're saying, we're going to serve this class of consumers. That's your privilege. But what you do is you have a market participation which is sanctioned by the criminal law. You've built this trash utopia where everybody sends wonderful trash and you enforce use of that by the criminal law. So you're engaging as a market participant, but you're taking an extra advantage by using the criminal law to enforce, to enforce its use.

MR. CAHILL: Your Honor, I don't -- I agree with you that we're providing a service here, and we do use the law to require that haulers and generators participate in the service that we -- in the system that we've created. We need to have -- to achieve the goals that we're trying to achieve. We've asked our public to separate their wastes and we've asked our haulers to collect it in a way that's consistent with the programs that we've established.

JUSTICE SCALIA: You could do that by requiring all trash pickup to segregate recyclable and non-recyclable, and if it's going to cost each householder just as much trouble then there could be competition and you would have achieved your goal. No?

MR. CAHILL: No, Your Honor. There is no competition between our program and -- that's offered by the private sector. What we do is different than what the private sector offers and there's no place else for it to go. The haulers are required today to comply with the program and to coordinate their activities with the separation done by the residents and the facilities that the authority has putting to.

We do things -- we have three different, three basic differences between what we do and what the private sector would do. The first one is to step in and take some of the risk for proper disposal. When the haulers make the decision about where the garbage goes, there's a liability that attaches to the waste. If it goes to the wrong place it's going to follow, follow back both to the hauler and to the person who generated it. We have had some bad experiences with people making bad decisions about where waste goes in the 1980s and the public asked us to set something up so that they could trust who was making the disposal decisions. So as a government we've stepped into that problem. We've stepped into the shoes of the generator, and we're trying to set up a place --

JUSTICE SCALIA: You could do that by law. You could do that by law. You could specify that only certain waste facilities can be used.

MR. CAHILL: I think not, Your Honor.

JUSTICE SCALIA: You don't have to run the business in order to assure that, do you?

MR. CAHILL: I think we do.

JUSTICE SCALIA: Why?

MR. CAHILL: Because we don't have the power as a local government in New York to talk to landfills in Ohio or Pennsylvania about how they should run their facilities. The only way that we can be sure that it goes to the right place, that's engineered the right way and built the right way and run the right way is to offer to do it ourselves. And that's what we've --

JUSTICE ALITO: But none of that -- in answer to my earlier question, I thought you said none of that really matters, right? The only thing that matters is that this is a publicly owned facility. You could be selling hamburgers or renting videos and it would come out the same way.

MR. CAHILL: I think why public ownership matters is that it's not discriminatory. I think the strict scrutiny test should not apply when government owns --

JUSTICE SCALIA: So your answer is yes?

MR. CAHILL: Yes.

JUSTICE SCALIA: It doesn't matter? Hamburgers are just as good?

MR. CAHILL: Well, hamburgers, Your Honor, if the government was going to be the sole purveyor of hamburgers in a community, I think they'd have to have a very, very good reason. If they had such a good reason, then yes, government could do that.

JUSTICE SOUTER: Well, that's just a question of New York law, isn't it?

MR. CAHILL: Of --

JUSTICE SOUTER: I don't know, I don't know what municipalities can do in New York. You say they've got to have a good reason. I assume you're referring to New York law for that purpose.

MR. CAHILL: I am not, Your Honor. I have no idea --

JUSTICE SOUTER: What are you referring to, then?

MR. CAHILL: The concept, the concept that government might be, might find it necessary to get into the hamburger business. I can't --

JUSTICE SOUTER: Then essentially it's just a political check on it. When you say there's got to be a good reason, politically people would get mad if you didn't have a good reason; is that basically it?

MR. CAHILL: That's one reason. It would also --

JUSTICE SOUTER: But there's no Commerce Clause reason?

MR. CAHILL: I think there's no Commerce Clause reason.

JUSTICE SOUTER: Okay.

MR. CAHILL: I think there's no Commerce Clause reason.

JUSTICE STEVENS: Mr. Cahill, you started to tell us three reasons why it was important that you regulate. You gave us one. Mention the other two.

MR. CAHILL: The other two are, Your Honor, that we are fulfilling national objectives in trying to establish the system that reduces the amount of waste that we generate and recycles as much as possible. That's not necessarily something that the private sector would do. A landfill is not built to discourage the amount of waste that comes through it. Our system is designed to try to change the habits of our citizens and increase recycling --

JUSTICE KENNEDY: Well, but it's basic Commerce Clause analysis that a State has no interest in what happens to the product out of State. Baldwin versus Seelig.

MR. CAHILL: Your Honor, I think --

JUSTICE KENNEDY: You can't say we want -- we're enacting this law to affect what happens in other States. That's just contrary to the Commerce Clause.

MR. CAHILL: We are not attempting to regulate what goes on in other States. We are attempting --

JUSTICE KENNEDY: But I thought that was just the answer you gave to Justice Stevens on your point two.

MR. CAHILL: We are attempting to protect our own citizens by reducing the liabilities that they may incur if that waste is shipped anywhere outside of the counties. We hope to give them a better solution for disposal than they would get from the marketplace. To the extent that liability crosses state lines, we are trying to protect our citizens from that liability --

JUSTICE SCALIA: Whether they want the protection or not?

MR. CAHILL: Well --

JUSTICE SCALIA: And whether a private individual can come and offer them the same protection for less money or not?

MR. CAHILL: Yes, Your Honor, that's true.

JUSTICE SCALIA: We're the government and we're here to help you?

MR. CAHILL: Yes.

JUSTICE SOUTER: But isn't that almost a fourth point? I realize you didn't get the third point out yet. But isn't -- I remember your brief and isn't there sort of a fourth point? And that is, I will assume that the government does have some basic health and safety objectives and the objective to protect its citizens here.

MR. CAHILL: Yes.

JUSTICE SOUTER: If the government tries to pursue these policies solely by private inducement, trash haulers may say, we don't want to deal on those terms, we can haul somewhere else, in another county, another State, what-not.

By taking on the job itself, the government in effect is guaranteeing that to the extent it can protect its citizens, induce respect for environmental policy, and so on, it will do so without any cessation of service? There's kind of an assurance of service plus the objectives that the government gets by running the plant itself. And isn't that sort of the nub of all of your points?

MR. CAHILL: Yes, Your Honor, that's true. That is the essence of government. We are there and we are going to have to stay there. Whether -- where a private entity might decide to go out of business tomorrow, government is going to be there to continue to do what we set out to do.

But this leads me also to my third point, which is that we're attempting to implement a comprehensive solid waste plan. With the passage of Federal legislation on these environmental matters touching on waste in the 1970s, with the Resource Conservation and Recovery Act, and With the Comprehensive Environmental Response and Liability Act, there was a new message sent to the country, which to generators meant, you better think about what you're doing with this stuff. You better make a -- you better watch where it goes and you better be careful because liability could attach to you.

And RCRA told government, States and localities, it was their responsibility to come up with plans to find new ways to manage solid wastes. That's what we've done. Any time a government comes together to put a plan together to dispose of solid wastes, whether like ours it uses several different technologies to try to address different parts of the waste stream, you have to have the cooperation of the people who collect the waste. If the people who collect the waste could drive its away to anywhere they please, the plan is no plan; the plan is just a suggestion. The haulers

JUSTICE KENNEDY: Who mandated this plan? The State of New York?

MR. CAHILL: The State of New York.

JUSTICE KENNEDY: But the State of New York can't mandate what happens to interstate commerce.

MR. CAHILL: No, Your Honor, it cannot.

JUSTICE KENNEDY: If you say the Congress of the United States has authorized discrimination against interstate commerce, then of course it can do that. That has happened.

MR. CAHILL: That is not our position, Your Honor. We're not saying that RCRA or any of these statutes authorize discrimination against interstate commerce. What the Federal statutes did do, however, was recognize that the states do have the sovereign power to act, and they expected the states to act in this way.

JUSTICE SCALIA: Let's take one of these classic discrimination cases involving milk. I think what you're telling us is that if Wisconsin adopted a law requiring all milk to be pasteurized at a facility owned and operated by the State of Wisconsin, that would be perfectly okay.

MR. CAHILL: That would not discriminate against interstate commerce.

JUSTICE SCALIA: That's right. And it would really advantage Wisconsin dairy farmers, wouldn't it, and really disadvantage out of Wisconsin dairy farmers, and you think that the Commerce Clause doesn't speak to that.

MR. CAHILL: No, I do think the Commerce Clause speaks to it, Your Honor, but I just -- our position is it just doesn't require strict scrutiny. I think the Pike test is a very good test to get to the bottom of why Wisconsin would want to do such a thing, and it would also be a good test to show just what the adverse impact on interstate commerce was, and what precisely the benefits of, to Wisconsin there might be.

I think the Pike test --

CHIEF JUSTICE ROBERTS: So then, the Commerce Clause would become the vehicle by which we would develop federal law about what's appropriate for municipal governments to do and what's not appropriate? We could decide it may be appropriate to run waste facilities but not to run milk pasteurization. I don't know how we would do that.

MR. CAHILL: I don't know how you would do that either, Your Honor, but you would be led into that by accepting the petitioner's argument that public services and private sector services are comparable under the Commerce Clause. To go back to your example, earlier, Justice Scalia --

CHIEF JUSTICE ROBERTS: Well, if we accepted that argument, we would treat the public services just like we treat, you know, the legislation favoring private companies. You're the one that's arguing for special treatment based on public ownership.

MR. CAHILL: I think we are not, Your Honor. I think public ownership and public services are unique and they're different, and they should be subject to Commerce Clause scrutiny, but not --

CHIEF JUSTICE ROBERTS: But the whole point is these are not unique. The whole point is there are private companies that provide these kinds of services. Maybe water, maybe electricity, maybe those are or are not unique. But you can't say that this is a unique service being provided by government.

MR. CAHILL: I think the approach that Oneida-Herkimer has taken is in fact unique. It is tailored to our local situation. It's not something that the marketplace would provide if the government was not there. And if the Petitioner's idea that any government service could be challenged under the dormant Commerce Clause simply because there's a private entity out there that says they could do the same thing were accepted, the definition of discrimination would be changed from differential treatment of economic interests to differential treatment of government or economic interests. And whether we use the taxing power or police power to support a public enterprise, it would be subject to challenge.

JUSTICE STEVENS: But the challenge here isn't gauging this business, the question is whether you can require everybody in the area to go through the one facility and pay a tipping fee.

MR. CAHILL: Yes.

I would like to close, I think, because I'm running out of time, with just the admonition or requirement that we are, in providing a public service, still subject to the Constitution and we must deal with the part private sector fairly. But if we do deal with the private sector fairly and we don't favor anyone in state or anyone out of state, we should be judged under the balancing test of Pike, so that the Court, if the court below found the benefits of our system substantially outweigh any incidental burdens that are placed on it by commerce, placed on commerce by the system. Thank you.

CHIEF JUSTICE ROBERTS: Thank you, Mr. Cahill.

Ms. Halligan.

ORAL ARGUMENT OF CAITLIN J. HALLIGAN

ON BEHALF OF NEW YORK AS AMICUS CURIAE SUPPORTING THE RESPONDENTS

MS. HALLIGAN: Mr. Chief Justice, and may it please the Court:

As you suggested, Justice Breyer, the theory that petitioners would have the Court adopt here is in fact a novel one. What they are suggesting is that there is discrimination sufficient to trigger near fatal scrutiny every time the government takes over, to the exclusion of all private actors both in state and out of state, a government service, that that is sufficient to trigger strict scrutiny. That is completely inconsistent with the way that this Court has defined what constitutes discrimination for purposes of the dormant Commerce Clause.

The Court has said, and it has stressed repeatedly in its precedent, that discrimination is the differential treatment of in state and out of State economic interests, not government interests, in a way that benefits the former and burdens the latter. That's from Oregon Waste System.

JUSTICE STEVENS: Let me ask you a sort of simple question. Is there an interstate impact on, of a municipal rule whether it is milk, or garbage, or what, that says all of this product must be processed within this city before it can go out of State?

MS. HALLIGAN: There may well be an interstate impact.

JUSTICE STEVENS: Doesn't that have a burden on interstate commerce?

MS. HALLIGAN: It may well, and that is something that is appropriately judged under the Pike standard.

JUSTICE STEVENS: Isn't that exactly what we have here?

MS. HALLIGAN: I think that you do have that here, and you should judge it under the Pike valency test, not under the near fatal scrutiny that's, that's

JUSTICE KENNEDY: But Pike doesn't apply to discrimination. Pike applies to burdens.

MS. HALLIGAN: Yes, Your Honor. And where you have --

JUSTICE KENNEDY: It seems you are conflating the two.

MS. HALLIGAN: Respectfully, I disagree, Your Honor. Where you have the government taking over a service entirely, that doesn't constitute discrimination because there is no local private interest that is advantaged, and no burden that is shifted to out of state interest. That is where the dormant Commerce Clause is primarily --

JUSTICE SCALIA: So long as the government enters the commercial market, it can, it can create Fortress California? MS. HALLIGAN: We're not asking for a rule that broad, Your Honor. What we are suggesting is that where you have a publicly owned operation, a government operation, and it does not disproportionately benefit in state or local interests, as against out of state interests -- But it always does. It benefits the people of the State, who make the money from the money from the, from the very expensive hamburgers that are sold by the State of California.

MS. HALLIGAN: If --

JUSTICE SCALIA: It always benefits the State of California.

MS. HALLIGAN: Well --

JUSTICE SCALIA: And you're saying so long as it doesn't benefit one particular malefactor of great wealth in the State of California, it is okay.

MS. HALLIGAN: No, Your Honor --

JUSTICE SCALIA: I don't see the distinction as far as the harm to the national market is concerned.

MS. HALLIGAN: If you were to have government action, for example, someone suggested could the government sell hamburgers. I believe Justice Alito suggested that, and that was to operate to the disadvantage of out of state interests, even if it only advantaged one in state interest, we would agree that that would be appropriate for treatment under strict scrutiny. But that's not what you have here.

What both the district court and the circuit court in fact found here is that the primary burden of these local ordnances in fact is on local residents. And so the political process check that this Court has found critical in cases like Minnesota versus Cloverleaf and Wunnicke is very much precedent here. This is not an attractive proposition that these localities have entered into.

JUSTICE KENNEDY: What would you do with Justice Alito's question? Dean Milk versus Madison: All milk must be processed whether been 20 miles of where it's --

MS. HALLIGAN: It's --

JUSTICE KENNEDY: -- produced.

MS. HALLIGAN: Yes.

JUSTICE KENNEDY: Held discriminatory against interstate commerce. Could -- under your view, could your city require all milk be pasteurized within your city at a government owned, city owned facility?

MS. HALLIGAN: If that rule imposed no disproportionate benefits on out of state --

JUSTICE KENNEDY: No, but Justice Scalia says it always does because it benefits the locality.

MS. HALLIGAN: It's different if it benefits

JUSTICE KENNEDY: You have -- by criminal laws --

JUSTICE STEVENS: You -- I'm sorry. We're looking at the interstate aspect from the wrong point of view.

I'm a home owner. I have two choices. I either send it to the local facility or I can ship it over to New Jersey. You're telling me I can't ship it to New Jersey. Doesn't that burden an interstate transaction?

MS. HALLIGAN: This is very different from those kinds of export bans. Those export bans did one of two things.

JUSTICE STEVENS: This is an export ban.

MS. HALLIGAN: The export bans that this Court has struck down either created local --

JUSTICE STEVENS: Your case involves an expert ban. All the trash has to be processed in your tipping facility.

MS. HALLIGAN: It does, and it does, and to the extent that's what you are characterizing as an export ban, that's certainly correct. What the Court has found problematic about export bans are either that they are put in place to create local to correct economic opportunities, for example the timber cases or the shrimp cases.

That's not what you have here. There's no allegation that the purposes of these statutes is to foster or promote local industry. In fact, the only plaintiffs in this case are local haulers themselves.

CHIEF JUSTICE ROBERTS: Well, there is an allegation that you charge above market rates to pursue particular economic goals that the municipality has.

MS. HALLIGAN: For a different basket of services, Your Honor. A basket of services that includes a wider range of, of goals that the private sector has no Interest in providing.

To return, to return to the question of whether or not this is an inappropriate benefit for the citizens, I would argue that there is a meaningful distinction between government taking an action which benefits the citizens as a whole, which we would hope any government law would -- any law passed by a government would do, as opposed to a law that benefits a local private economic interest and is intended to do so.

For the dormant Commerce Clause to reach that far would be unprecedented. It would implicate not only electricity but under Petitioner's theory it would implicate, I would think for example government decisions to provide prison and correctional services through a public system as opposed to a private one. What about school bus services? Car insurance --

CHIEF JUSTICE ROBERTS: If only facilities on your side of the case that are traditional municipal services, but then this seems to be at the borderline. I mean, on the other side, they have the hamburger cases or the milk processing cases. How do we decide whether this is one of the traditional governmental services, the police, the prisons, whatever, or is it one of these that looks more like regular market participation?

MS. HALLIGAN: Two answers if I can, Your Honor. First of all, I think this Court has answered that question with respect to waste management more than a hundred years ago in the California Reduction case. It was clearly held there the provision of waste management services is an essential function that governments appropriately provide.

So that's been answered here. With respect to this question about hamburgers and other services that look commercial, I think there are two checks on those kinds of ordinances. First of all, I think it is very likely that in most circumstances if you were to say that hamburgers will be sold at a government operated facility, that that would disadvantage local interests significantly, and there would be a political process check.

Secondly the Court has been clear that it is not bound by formalistic distinctions in the Commerce Clause arena and so it will look for discrimination that is protectionist in nature whether it is, as the Court has said, forthright or ingenious. So if case were to present itself, and the facts in the facts in this case no whiff of that protectionism, where you were to believe that the motive of a government entity was, in fact, to favor some local private interest, then strict scrutiny might be appropriate.

JUSTICE ALITO: Is that what it turns on, the motive? If the motive were to keep the jobs at the plant in New York, rather than in some facility outside of New York, that would be, that would make a difference?

MS. HALLIGAN: No, I think this Court has held the purpose alone cannot cure an inappropriate means that is used. But what we are arguing is that here you have both a very legitimate purpose, as my co-counsel outlined for you; you also have appropriate means. It is not inappropriate under the dormant Commerce Clause for the government to step in and take over provision of a service. Petitioners themselves agree that, in fact, the government could take over waste management services from soup to nuts. They suggest that there is some difference of a constitutional magnitude because some aspect of that is contracted out to the private market, and would argue that actually turns the dominant Commerce Clause on its head.

One final point, if I could make. Several of you asked about whether or not there are other mechanisms that the localities could use to further these goals, goals which are set forth in both Federal and State laws.

First of all, under the Pike test, there is no least restrictive alternative test. So it is not required that the localities demonstrate that there is no other option that might meet these goals. The Second Circuit concluded and rightly so I think on page 20a of the appendix to the petition that there was no other option that presented itself in the record that the counties could address, or could use to address their liability concerns and to encourage recycling across a very wide range of products.

JUSTICE SCALIA: There is no determinative element in the Pike test whatever. It is a totality of the circumstances test, right?

MS. HALLIGAN: Yes, Your Honor.

JUSTICE SCALIA: That's wonderful. (Laughter.)

MS. HALLIGAN: And we suggest that that is the appropriate test here.

JUSTICE GINSBURG: Ms. Halligan, how do you answer something in the Petitioner's brief that says there's no difference between this case and Carbone because these transfer stations are constructed and operated by a private company?

MS. HALLIGAN: I think that that distinction is essential here. It is essential because of the purposes of the dormant Commerce Clause. These are publicly owned facilities. The facility in Carbone was privately owned and as you suggested, Justice Ginsburg, the opinion is replete with careful references to that.

CHIEF JUSTICE ROBERTS: Where do you, where do you come out on the 50-50 facility?

MS. HALLIGAN: I think that's a hard question, Your Honor. And I think there the kind of approach that the Court took in a case like Westland Creamery and Hunt versus Washington Apple is helpful.

If it appears to the Court that the motive is protectionist then it is appropriate to apply strict scrutiny. Whether that line is 50 percent, 55 percent

CHIEF JUSTICE ROBERTS: Well, I thought you said earlier motive was not the test, in response to I think it was Justice Alito.

MS. HALLIGAN: Yes, Your Honor. I'm saying you should look as you have -- and I see my time is up. If I may continue -- you should look as you have, in all of the dormant Commerce Clause cases at the context that is presented. So if there is 100 --

CHIEF JUSTICE ROBERTS: Thank you. Thank you, Counsel.

Mr. Tager you have three minutes remaining.

REBUTTAL ARGUMENT OF EVAN TAGER,

ON BEHALF OF PETITIONERS

MR. TAGER: Thank you, Mr. Chief Justice.

The first point I'd like to make is I'd like to ask the Court to review Reeves versus Stake which is a market participant case. But what is significant there -- that's the cement plant case -- there's two significant things about that case which I think are of interest.

First, the Court's footnote 1 is an interesting historical footnote about how South Dakota had elected to make a lot of these different industries state-run industries, so the hypotheticals we've been discussing are not completely off the wall.

If you can do it for waste you can do it for, in that case coal. They wanted to do it for stockyards but I think the legislature rejected the government's proposal. So the hypos are right on point.

Secondly, the Court made a point there in rejecting the argument, the constitutional argument that the state was not prohibiting competing cement companies. And I think the inference from that is that it had, there would have been a Commerce Clause problem.

Second, Mr. Cahill's user -- user fee point. I just want to remind the Court that in addition to paying for the recycling and everything, they were using the user fee to pay off the bond for their failed energy recovery facility. So, if you start focusing on what you use it for, it is a very slippery slope.

On his point about protecting the generator from liability, we've addressed that at great lengths in our briefs. But one other point I want to make is he's wrong about their ability to determine whether other facilities that the haulers want to use are safe for environmental purposes. That's exactly what the city of New York does. Because it doesn't have its own disposal facility, its got very stringent requirements for where the waste can be taken.

Fourth, Justice Souter, I believe you were raising an inquiry about the political process and whether that's adequate to protect the out of State interests.

And I'd like to refer you to the West Lynn Creamery decision where the Court said the people whose oxen are being gored by a tariff are the local residents as well, but a tariff is the prototypical Commerce Clause violation. The political process is simply not a good answer to our argument.

In terms of your other question about --

JUSTICE SCALIA: A tariff is also imposed by a State, isn't it? As opposed to --

MR. TAGER: Yes.

JUSTICE SCALIA: Money goes to a State.

MR. TAGER: It would go to a State. I suppose it could be done by a subdivision, though.

On Ms. Halligan's point about California Reduction, I just would like to remind the Court that that was a case of flow control to a private company. So Carbone, to the extent that case was concerned at all with the Commerce Clause, and it didn't say that it was, it was a taking case, I think, it has been overruled to the extent it had any Commerce Clause implications.

Finally, I would like end with the point that Carbone has been the law for 13 years -- may I finish?

If the Respondents have a problem with Carbone, Congress can fix it. That's one of the unique things about the Commerce Clause that is different from other constitutional provisions.

CHIEF JUSTICE ROBERTS: Thank you, counsel. The case is submitted. (Whereupon, at 12:08 p.m., the case in the above-entitled matter was submitted.)