Federal Court Upholds Alameda County Pharma EPR Ordinance

By John Moore, Henn, Etzel and Moore
A semi-monthly feature, exclusive to NCRA News, from NCRA general counsel and board member John Moore, concerning recent legal decisions relating in some manner to Zero Waste.

Not unexpectedly, a 3 judge panel of the Ninth Circuit Court of Appeal unanimously agreed that Alameda County’s pharma EPR ordinance is constitutional in the case of PRMA v. County of Alameda, rejecting claims by drug manufacturers and their allies that the ordinance violated the Commerce Clause. The Court affirmed a Judgment to the same effect by Judge Richard Seeborg of the Northern District of California.

According to the Court, “pursuant to the Ordinance, manufacturers must set up disposal kiosk sites throughout (Alameda County). The kiosks will consist of disposal bins located in areas ‘convenient and adequate to serve the [disposal] needs of Alameda County residents.’ Manufacturers must also promote the stewardship program to the public via ‘educational and outreach materials.’ After collection, the prescription drugs must be destroyed at medical waste facilities. The manufacturers are free to individually operate separate product stewardship programs or to jointly operate a program with one or more other manufacturers. If manufacturers choose to operate a program jointly, the Ordinance requires that the program’s costs be spread fairly and reasonably among the manufacturers. The manufacturers may run the stewardship program themselves, or they may pay a third-party to operate the stewardship program on their behalf. Assuming the manufacturers jointly operated a stewardship program, the start-up costs would approximate $1,100,000.”

County estimated that, “a total annual cost to each manufacturer between $5,300 and $12,000.” The Court accepted that County-wide sales of prescription drugs in 2010 were $965 million and that sales have not declined since then.

The Commerce Clause of the US Constitution has been the lynchpin of many cases involving flow control- the lawfulness of a local jurisdiction commanding that solid waste be disposed at specific facilities. The test for whether a law violates the Commerce Clause generally is “When a state statute directly regulates or discriminates against interstate commerce, or
when its effect is to favor in-state economic interests over out-of-state interests, [the Court has] generally struck down the statute without further inquiry.

When, however, a statute has only indirect effects on interstate commerce and regulates evenhandedly, [the Court has] examined whether the State’s interest is legitimate and whether the burden on interstate commerce clearly exceeds the local benefits.”

The Ninth Circuit found that the Ordinance did not implicate either test. Although the Court analyzed each test carefully as applied to the Ordinance, most telling was the Court’s dismissal of most of the challengers’ arguments as not supported by any legal authority. Nor did the Court doubt that the Ordinance legitimately furthered the County’s interest in safe disposal of post-consumer prescription drugs. Interestingly, while prescription drugs sold across state lines clearly are part of interstate commerce under the Commerce Clause, the Supreme Court has never clearly stated why “solid waste” is an article of interstate commerce.

From the vantage of this author, this was a frivolously-filed case doomed from the start designed to impose cost and delay on the County. The Ninth Circuit should sanction the plaintiffs in this case and order them to pay all of the County’s fees and costs in this litigation.

Among the amici supporting the County were the League of California Cities and NRDC.