Harper v. Public Service Com'n of Wv

Decision Date11 April 2006
Docket NumberNo. 2:03 CV 00516.,2:03 CV 00516.
Citation427 F.Supp.2d 707
CourtU.S. District Court — Southern District of West Virginia
PartiesJames Allen HARPER, a resident and citizen of Ohio previously doing business as Southern Ohio Disposal, and Southern Ohio Disposal LLC, an Ohio limited liability company, Plaintiffs, v. PUBLIC SERVICE COMMISSION OF WEST VIRGINIA, Jon W. McKinney,<SMALL><SUP>1</SUP></SMALL> in his official capacity as Chairman of the Public Service Commission of West Virginia; Edward H. Staats, in his official capacity <I>as</I> Commissioner of the Public Service Commission of West Virginia; and R. Michael Shaw, in his official capacity as Commissioner of the Public Service Commission of West Virginia, Defendants. WV Association of Solid Waste Haulers and Recyclers, BFI Waste Systems of North America, Inc., Stewart's Sanitation, Sunrise Sanitation Services, Inc., Tygarts Valley Sanitation, Inc., and United Disposal Services, Inc., Intervenors-defendants.

John Philip Melick, Jackson Kelly, Charleston, WV, for Plaintiffs.

Cassius H. Toon, Franklin G. Crabtree, Richard E. Hitt, Public Service Commission of West Virginia, Charleston, WV, for Defendants.

Samuel F. Hanna, Hanna & Hanna, Martin J. Glasser, Richard L. Gottlieb, Webster J. Arceneaux, III, Lewis Glasser Casey & Rollins, Eric L. Calvert, Leonard B. Knee, Bowles Rice Mcdavid Graff & Love, Charleston, WV, for Intervenors Defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

STANLEY, United States Magistrate Judge.

The court conducted a bench trial in this matter over a period of four days from March 7, 2006, through March 10, 2006. Pursuant to Rule 52 of the Federal Rules of Civil Procedure, the court makes the following findings of fact and conclusions of law.

Findings of Fact
Statutory Scheme and Context

1. West Virginia Code § 24A-2-5 (2004) provides that "[i]t shall be unlawful for any common carrier by motor vehicle to operate within this state without first having obtained from the commission a certificate of convenience and necessity." The Public Service Commission of West Virginia ("PSC") has certified motor carriage of solid waste since 1937, aside from a free market decade from 1949 to 1959. See Acts Reg. Sess.1949, c. 108; Acts Reg. Sess.1959, c. 146. No evidence was presented that, during the period from 1949 to 1959, reasonably priced solid waste service was not substantially available to West Virginians, or that an open market for service led to any environmental or other problems.

2. West Virginia is one of only two states in the country that requires certification for solid waste haulers.

3. Currently, there are approximately 100 solid waste haulers in West Virginia who hold certificates under West Virginia Code § 24A-2-5. The two largest certificated solid waste haulers in the State are out-of-state companies, one of which is defendant BFI Waste Systems of North America, Inc. ("BFI").

4. In Medigen of Kentucky, Inc. v. Public Service Comm'n, 787 F.Supp. 590, 592-93 (S.D.W.Va.1991), the United States District Court for the Southern District of West Virginia aptly explained the certification process before the PSC.

Upon application for the certificate, a legal notice of the application is published in the proposed area of operation and existing transporters are given the opportunity to oppose the application. If no protest is made, the certificate may be granted without hearing. If protest is received, the applicant must appear at a hearing and demonstrate that the public convenience and necessity require the proposed service. Existing transporters may present contradictory evidence.

In considering the application, the PSC must consider the existing transportation services in the area to be served and if the existing services are "reasonably efficient and adequate," the certificate will not be granted. In addition to the required showing of convenience and necessity, applicants must show financial ability, experience and fitness. All contested applications are judged by the same legal standards. Once issued, certificates of convenience and necessity have no expiration date. The PSC has authority to require a certificate holder to provide service to all members of the public within its certificate area. In addition, the PSC regulates other aspects of the transporter's operations, including rates charged to customers.

(citations omitted).

5. In the 1990s many landfills throughout the country closed in order to comply with certain federal environmental regulations. As such, there are fewer landfills and they are further apart, making unimpeded interstate shipment of solid waste an important concern. As of September 1, 2004, West Virginia had eighteen municipal solid waste landfills and eighteen transfer stations in operation throughout the State. (Defendants' ("Def.'s") Trial Exhibit 10, p. ES-1.)

6. In 2001, 203,869 tons of out-of-state waste were imported for disposal into West Virginia landfills; in 2003, 229, 386 tons of waste were imported. (Def.'s Trial Exhibit 10, p. ES-1.) In 2001, 431,956 tons of West Virginia waste were exported to landfills located in adjacent states; in 2003, 382,975 tons of waste were exported. (Def.'s Trial Exhibit 10, p. ES-1.)

7. The PSC does not regulate the trash rates of municipalities.

8. On February 5, 2003, the United States Court of Appeals for the Fourth Circuit, in Medigen of Kentucky, Inc. v. Public Service Comm'n, 985 F.2d 164 (4th Cir.1993) ("Medigen-Fourth Circuit") affirmed the judgment of the United States District Court for the Southern District of West Virginia in Medigen of Kentucky, Inc. v. Public Service Comm'n, 787 F.Supp. 590 (S.D.W.Va.1991) ("Medigen I") and Medigen of Kentucky, Inc. v. Public Service Comm'n, 787 F.Supp. 602 (S.D.W.Va.1992) ("Medigen II") that West Virginia Code § 20-5J-10, requiring motor vehicle common carriers engaged in the collection, hauling and transportation of infectious medical waste to obtain certificates of convenience and necessity from the PSC, violated plaintiffs' rights under the Commerce Clause of the United States Constitution.

9. After Medigen-Fourth Circuit, the PSC took the position that the Fourth Circuit's decision was limited to medical waste haulers and that "[w]hether Medigen should be read to apply to the general transportation of solid waste is one issue upon which the Commission has not yet ruled." (Plaintiffs' ("Pl.'s") Trial Exhibit 7.) The PSC also took the position that "[t]he Transportation Division is of the opinion that the burden is on a plaintiff or complainant to demonstrate that Medigen is not applicable. . . ." (Pl.'s Trial Exhibit 7.) The PSC was looking for a test case to determine whether Medigen applied to solid waste haulers.

Procedural and Factual History

10. Plaintiff Southern Ohio Disposal LLC ("SOD"), an Ohio limited liability company owned by plaintiff James Allen Harper, also a resident of Ohio, operates a solid waste disposal service. From a base in Pomeroy, Ohio, SOD employees drive garbage trucks to residences and businesses of customers in Mason County, West Virginia and Ohio, empty refuse containers into the trucks, and then drive the trucks to a transfer station in Pomeroy, Ohio or a landfill near Nelsonville, Ohio, for disposal of the waste. SOD does not dispose of waste in West Virginia. SOD vehicles bear apportioned license plates under an International Fuel Tax Agreement with the State of Ohio. SOD pays taxes to West Virginia based on the mileage accumulated in each state.

11. Neither Harper nor SOD holds any motor carrier operating authority from the PSC pursuant to West Virginia Code § 24A-2-5. Harper's business partner contacted the PSC about the need for such authority before serving their first customers in 1999, and was told none was necessary so long as SOD's vehicles had apportioned tags, fuel stickers and other requirements imposed on interstate motor carriers.

12. In 1999, General Refuse Service of Mason County, Inc. ("GRS"), whose successor in interest is BFI, held several certificates required by West Virginia Code § 24A-2-5, three of which covered Mason County. (Pl.'s Trial Exhibit 44, December 3, 1999, Letter of Transmittal.) On July 21, 1999, GRS applied to the PSC for an increase in its rates under its three Mason County certificates, requesting an increase from $11.03 per month to $18.92 per month for residential customers. (Pl.'s Trial Exhibit 44, Recommended Decision, p. 1.) On February 6, 2000, the PSC adopted the initial staff recommendation of a rate increase to $16.95 for GRS's Mason County residential customers. (Pl.'s Trial Exhibit 44, Recommended Decision, pp. 2, 4.)

13. On March 22, 2000, GRS filed a formal complaint against the Town of Mason ("Town") in the PSC, alleging that the Town violated the laws of the State of West Virginia by attempting to contract for the removal of solid waste, trash and rubbish with SOD, an entity that does not possess a certificate of convenience and necessity to operate within the Town. (Pl.'s Trial Exhibit 10, p. 1.) GRS requested the PSC to issue an order commanding the Town to cease and desist from the aforesaid alleged violation of West Virginia law. (Pl.'s Trial Exhibit 10, p. 1.) On May 24, 2000, GRS amended its complaint to name SOD. (Pl.'s Trial Exhibit 10, p. 2.) On June 21, 2000, the Town and SOD removed the PSC action to this court. GRS v. Town of Mason, et al., No. 3:00-0512 (S.D.W.Va. Aug. 28, 2000); (Pl.'s Trial Exhibit 10, p. 2). On August 28, 2000, the case was remanded to the PSC for further proceedings because, pursuant to 28 U.S.C. § 1441(a), the PSC's limited quasi-judicial functions are insufficient to view it as a state court for the purpose of removal. (Pl.'s Trial Exhibit 10, p. 2.)

14. On March 14, 2001, BFI filed with the PSC, an application for assignment and transfer of ten certificates from GRS and its affiliated companies, including the certificates covering Mason County, West Virginia. (Pl.'s Trial Exhibit 37, p. 3.) The...

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