Texas Court Sides With Franchisees On Constitutional Issue

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.

A federal judge in Dallas enjoined the City of Dallas from enforcing a flow control ordinance, finding that the ordinance would unconstitutionally impair the contract rights of the city’s franchised haulers.

Dallas’ flow control ordinance required its solid waste haulers to dispose of all solid waste at city-owned facilities. According to the Court’s decision, the City did not reserve the power to direct disposal in its franchise agreements.

WMI and Republic, two of the franchisees, and the NSWMA, argued successfully that the new flow control ordinance would impair the franchisees’ pre-existing contract rights for disposal at their own and other facilities.

The Court, finding that the city’s dominant purpose of the flow control ordinance was to raise revenue for the City, held that raising municipal revenue was not a significant public purpose to justify impairing private contract rights. The Court issued a preliminary injunction blocking enforcement of the ordinance until trial. The trial could yield a different outcome.

To the author’s knowledge, no private hauler in a reported California court decision has urged application of the Contracts Clause in the US Constitution to a city’s grant of an exclusive solid waste franchise. Certainly as many Bay Area cities have opted to go “exclusive” in exchange for substantial payments by the franchisee, the impact on other haulers with existing hauling contracts may likewise be unconstitutional. Read more at the NSWMA sponsored website: Fight City of Dallas Flow Control.