City of Brundidge v. Ala. Dep't of Envtl. Mgmt.

• Citation: 218 So.3d 798
• Decision Date: 05 February 2016
• Docket Number: 2140342.,2140325
• Parties: CITY OF BRUNDIDGE v. ALABAMA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT and Brundidge Acquisitions, LLC. City of Brundidge and City of Brundidge Solid Waste Authority v. Coffee County Commission and Brundidge Acquisitions, LLC.
• Court: Alabama Court of Civil Appeals

218 So.3d 798

CITY OF BRUNDIDGE

v.ALABAMA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT and Brundidge Acquisitions, LLC.

City of Brundidge and City of Brundidge Solid Waste Authority

v.Coffee County Commission and Brundidge Acquisitions, LLC.

2140325

2140342.

Court of Civil Appeals of Alabama.

Feb. 5, 2016.

Certiorari Denied Sept. 16, 2016

Alabama Supreme Court Nos. 1150530 & 1150534.

Dorman Walker and John Naramore of Balch & Bingham LLP, Montgomery; and Ed R. Haden and James L. Noles, Jr., of Balch & Bingham LLP, Birmingham, for appellants City of Brundidge and City of Brundidge Solid Waste Authority.

Luther Strange, atty. gen., and Paul Christian Sasser, Jr., and Anthony Todd Carter, asst. attys. gen., Alabama Department of Environmental Management, Office of General Counsel, Montgomery, for appellee Alabama Department of Environmental Management.

Royal C. Dumas and Robert E.L. Gilpin of Gilpin Givhan, P.C., Montgomery; Joseph W. Carlisle of Gilpin Givhan, P.C., Birmingham; and M. Dale Marsh of Marsh & Cotter, LLP, Enterprise, for appellee Brundidge Acquisitions, LLC.

Craig S. Dillard and Mary Pat O'Connor of Webb & Eley, P.C., Montgomery, for appellee Coffee County Commission.

DONALDSON, Judge.

These two appeals from judgments of the Pike Circuit Court ("the trial court") relate to the ownership, operation, and licensing of a landfill located in the City of Brundidge ("Brundidge" or "the City"), a municipality located in Pike County. Brundidge and the City of Brundidge Solid Waste Authority ("COBSWA") appeal from a judgment of the trial court denying a complaint for declaratory relief, in which it was alleged that the Coffee County Commission violated Alabama law by improperly engaging in a "takeover" of the landfill through its alleged alter-ego organization, Brundidge Acquisitions, LLC ("BA"). Brundidge also appeals from a judgment of the trial court declining to set aside a decision made by the Alabama Environmental Management Commission ("the AEMC"), which had upheld the decision of the Alabama Department of Environmental Management ("ADEM") to transfer the solid-waste-landfill operating permit to BA without first obtaining Brundidge's approval. From the record before us, the actions of the Coffee County Commission do not appear to be prohibited by current law, and, therefore, for the reasons stated herein, the judgments of the trial court are affirmed.

Facts and Procedural History

The Brundidge landfill, which is located within the Brundidge city limits, was constructed in 1991 as a municipal solid-waste landfill. Pursuant to § 22–27–48, Ala.Code 1975, a part of the Solid Wastes and Recyclable Materials Management Act, codified at § 22–27–1 et seq., Ala.Code 1975, Brundidge approved the landfill site. Brundidge also entered into a host-government agreement with a private contractor to operate the landfill. Thereafter, in 1992, ADEM issued Permit No. 55–07 to authorize the Brundidge landfill to accept solid waste. From 1992 to 2007, ownership of the landfill changed three times. Brundidge did not object to ADEM's transfer of the permit to the new entities for any of those ownership changes.

In 2007, TransLoad America, Inc. ("TLA"), purchased the landfill. In September 2007, COBSWA, a public corporation established by Brundidge in 2003, entered into a host-government agreement with Brundidge Landfill, LLC, a subsidiary of TLA, authorizing that entity to operate the landfill and granting the City the right to collect administrative, or "tipping," fees from the landfill operations. Brundidge also received revenue from its treatment of leachate, a liquid byproduct generated by landfills, at the City's water-treatment facility. In 2012, TLA began to experience financial difficulty and filed for bankruptcy in the United States Bankruptcy Court for the District of New Jersey ("the bankruptcy court"), and Brundidge Landfill, LLC, ceased operating the landfill. Thereafter, both Brundidge and the Coffee County Commission made separate offers to purchase the landfill from TLA and one of TLA's creditors, but no sale of the landfill occurred based on those offers.

In October 2012, BA was formed. That same month, the Coffee County Commission passed two resolutions authorizing the issuance of up to $6 million of Coffee County's debt for the purpose of purchasing the landfill. One of the resolutions stated, in part, as follows:

"WHEREAS, the County has the power to grant public funds and lend its full faith and credit under Section 94.01 of the Constitution of Alabama of 1901 (also known as Amendment 772 to the Alabama Constitution of 1901), as amended, (hereinafter referred hereto as ‘Amendment 772’), which provides that a county may lend its credit to or grant any public funds or thing of value to or in aid of any private entity in support of a valid and sufficient public purpose; and

"WHEREAS, the County has determined that the increased disposal capacity provided by the Landfill will enhance economic development within the County and that the expenditure of funds for the Project will serve a valid and public purpose and is in the best interest of the County's residents and the public; and

"WHEREAS, the County has caused to be published a notice satisfying the requirements stated in Amendment 772, in order, to the extent Amendment 772 may apply, to approve and authorize the use and grant of public funds for providing the assistance described herein...."

In December 2012, BA purchased the landfill from the bankruptcy trustee for $4 million. In February 2013, the bankruptcy court approved the sale of the Brundidge landfill and authorized the trustee to reject the previous host-government agreement between Brundidge and Brundidge Landfill, LLC. In March 2013, ADEM approved BA's request to transfer Permit No. 55–07 from Brundidge Landfill, LLC, to BA.

On January 21, 2013, Brundidge and COBSWA filed a declaratory-judgment action in the trial court, seeking a ruling that the Coffee County Commission lacked authority to provide funds for the acquisition of the landfill and that BA lacked authority to lawfully operate the landfill without first entering into a host-government agreement with the City. Specifically, Brundidge and COBSWA claimed that the Coffee County Commission's resolutions and agreements with BA violate §§ 11–3A–2(d)(6) and 11–3A–2(e), Ala.Code 1975, which are part of the Alabama Limited Self–Governance Act, § 11–3A–1 et seq., Ala.Code 1975, and that the Coffee County Commission failed to comply with Art. IV, § 94.01, Ala. Const. 1901 (Off.Recomp.), also cited as Amendment No. 772.

On March 29, 2013, Brundidge also commenced an administrative proceeding with the AEMC to challenge the legality of ADEM's transfer of the permit from Brundidge Landfill, LLC, to BA without first seeking Brundidge's approval pursuant to § 22–27–48(a), Ala.Code 1975. On April 9, 2013, BA intervened in the administrative proceeding. AEMC denied Brundidge's request to stay the transfer of the permit. An administrative-law judge ("ALJ") was appointed to hear the matter, and, on June 6, 2013, the ALJ conducted a hearing at which he received the testimony of witnesses and documentary evidence. On September 24, 2013, the ALJ ruled in favor of ADEM and made the following findings and recommendations pertinent to this appeal:

"8. ADEM's transfer of Permit 55–07 was done without the approval of the City of Brundidge; however, that transfer does not violate Code of Alabama, 1975, § 22–27–48.

"9. Approval of the landfill was given by the City of Brundidge when Permit 55–07 was originally issued and § 22–27–48(a) does not require that ADEM revisit the issue of local government approval every time a permit is transferred. Only on the issuance of a new permit or a ‘modified’ permit is the approval of local government revisited. Such was not required with the transfer that occurred here.

"10. The rejection of the [host-government agreement] as referenced in the hearing and in the briefs ... occurred as a result of the actions and orders of the [the bankruptcy court]. ADEM simply transferred Permit 55–07, and its actions were not the cause of the City of Brundidge's loss of the contractual benefits it had received as a result of its earlier negotiations.

"11. The City of Brundidge will lose some of its control and benefit of the landfill because of the rejection of the [host-government agreement] as ordered by the Bankruptcy Court (conditionally done on February 19, 2013, and subsequently ordered at a time following the hearing of this matter on June 6, 2013) much like creditors lose rights and benefits every day when debtors file a petition in bankruptcy court. There is no question that people, companies and even municipalities suffer a harsh reality when they, as creditors (or in this case as a party to an executed contract), lose the benefit of their bargain because of a discharge in bankruptcy or some other actions of the Bankruptcy Court. Congress has decided that bankruptcy is an available remedy, and creditors or contractors lose as a result. That is what happened to the City of Brundidge through no fault of ADEM.

"12. The application process used herein for the transfer of this permit was not misleading to ADEM and there has been no complaint by ADEM that it was misleading."

On October 18, 2013, AEMC entered an order adopting the ALJ's findings and recommendations "with the exception that [AEMC] [found] that the transfer of Permit Number 55–07 was performed in a manner consistent with the promulgated rule of ADEM and consistent with applicable Alabama law...." On November 19, 2013, Brundidge appealed AEMC's ruling to the trial court. The trial court consolidated the declaratory-judgment action with the appeal from the administrative proceeding, although it held separate hearings and issued separate judgments in the cases.

In the declaratory-judgment action, Brundidge and COBSWA filed a motion for a summary judgment and a memorandum in support thereof. In its motion...