For those of us in the recycling community who also wear the "Contracts Manager" hat in our local jurisdictions, there has been some interesting solid waste litigation during the last year or so. The case that has received much of the attention has been A.G.G. Enterprises, Inc. v. Washington County, OR, currently pending on appeal in the Ninth Circuit. But there is another case, Pleasant Hill Bayshore Disposal, Inc. v. Chip-It Recycling Inc., (Chip-It) that has a similar factual basis to A.G.G, yet has a very different legal outcome.

The facts in Chip-It are straightforward. The plaintiff (Pleasant Hill Bayshore Disposal) has an exclusive franchise for the collection, removal, and disposal of all garbage, rubbish, and recyclable/salvageable materials within the City of Antioch. Despite this existing franchise, Chip-It collected and removed recyclable construction and demolition debris and hauled both source-separated and mixed loads of recyclable materials from customers within the City. Pleasant Hill then filed a complaint for damages and was granted injunctive relief claiming that Chip-It had violated its exclusive franchise. Chip-It fought against the injunction arguing that it contravenes the Federal Aviation Administration Authorization Act of 1994, (the same statute cited by A.G.G. in its suit against Washington County).

The primary basis of their claim is rooted in Section 14501(c)(1) of the statute, "Preemption of State Economic Regulation of Motor Carriers." This provision states that, "a State, political subdivision of a State, or political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier, (other than a carrier affiliated with a direct air carrier…) or any motor private carrier with respect to the transportation of property." Based on this provision, Chip-It concluded that, "Because Congressional intent to preempt local regulation of intrastate transportation of property is clear and unequivocal from the language of Section 14501, if Chip-It's transportation of recyclable materials is the transportation of property under federal law, then any state or local regulation of Chip-It's activities is impermissible." (It is worth noting that the FAA Authorization Act does not include a definition of "property.")

Although an Oregon district court in the A.G.G. case accepted this argument, the California Appeals Court did not. Here are some choice excerpts from the Chip-It decision filed by the Court of Appeal of the State of California, First Appellate District in August 2001.

"We are unable to agree with the A.G.G. conclusion that section 14501(c)(1) preempts state and local regulatory authority over waste collection, recycling, and disposal…As fairly indicated by its title, Congress intended the FAA Authorization Act to govern aviation carriers and certain types of motor vehicle carriers that are affiliated with aviation carriers….Garbage collection, as recognized by the legislative history…was clearly deemed to be an unrelated concern. There is no mention of local recycling programs in the legislative history, still less any indication that Congress intended to displace them."

"The logic of Chip-It's argument is that Congress would have the sole and exclusive power to legislate on every aspect of the collection and disposal of refuse…if it can be seen as "property" transported by a 'motor carrier.' It would be striking for such a massive shift of power and authority to be accomplished by a fragment of a subdivision in an act devoted to a subject that has no obvious relation to that of refuse and does not even employ that term. It verges on the inconceivable that Congress had such an intent."

The Court's analysis of whether the material Chip-It transports constitutes "property" is not as clear-cut as its analysis of federal preemption. That said, however, the decision does contain some enlightening language in this regard: "If, as Chip-It maintains, matter does not have to have value in order to constitute property within the meaning and scope of the FAA Authorization Act, it would follow that virtually any tangible matter is property the transportation of which by a motor carrier is thus immune from regulation by any unit of government except Congress."

Although the decision goes into some detail on legal precedents that include definitions of "property," "waste," and "discards," the Court ultimately determined that this question of "property" is only relevant if the FAA Authorization Act is applicable, due to its preemption of local regulatory authority. To this, the Court definitively says the following: "What is material, and what is clear beyond any doubt, is Congress's intent that the FAA Authorization Act would have no impact on 'garbage and refuse collectors.' It is that intent which is the ultimate authority in matters of preemption. Because that intent is so unambiguously expressed, it trumps Chip-It's elaborate efforts to rework the concept of property, even as aided by the A.G.G. trial court decision."

Several organizations filed a joint Amici Curia brief on behalf of Chip-It, including the Association of California Recycling Industries, CRRA, Californians Against Waste, and the Northern California Recycling Association. Similarly, several jurisdictions filed a joint Amici Curia brief on behalf of Pleasant Hill Bayshore Disposal, including the cities of Alhambra, Antioch, Camarillo, Irwindale, San Jose and Sunnyvale.