Flow Control Ruled Unconstitutional

By Paul Gable

A recent decision in a Texas federal court room may have large ramifications for a government established monopoly flow control law in Horry County. A federal judge in Texas ruled earlier this week that a similar Dallas flow control ordinance violates the U.S. Constitution.

The court finds that, despite the city’s proffered justifications, the evidence demonstrates that it implemented the flow control ordinance to raise revenue to advance its economic and proprietary interests…,” the judge wrote in his opinion. “This is an unreasonable exercise of its police powers.”

The virtually identical flow control ordinance in Horry County is currently being challenged in Florence federal district court.

Horry County currently is the only county in the state to mandate flow control of its waste stream by county ordinance 02-09. The ordinance requires that all waste generated in the county must be disposed at the Horry County Solid Waste Authority landfill on Hwy 90, giving the SWA monopoly control over the county’s waste.

The SWA was created by county ordinance 60-90 when county council wanted to get out of the day-to-day business of running the county dump on Hwy 90. What the county created at the time is questionable as mis-information, contradictory claims and the generally amorphous quality of the entity have been associated with the SWA organization ever since.

The SWA incorporated and registered its non-profit corporate status with the S.C. Secretary of State’s office on April 15, 1992. The seven members of the authority board are nominated by Horry County Council or the Horry County League of Cities, but all are approved by Horry County Council.

However, the SWA budget is included as part of the overall Horry County Government budget each year and the authority has never filed a Form-990 with the IRS, according to its accountant. It is believed that the SWA is the only registered non-profit corporation in the state not to file Form 990 on an annual basis.

In the local federal lawsuit challenging the county’s flow control ordinance, the SWA describes itself, in court documents, as a private corporation which owns the Hwy 90 landfill, a recycling facility and other property.

Yet, every time the SWA is referred to in public (either by its management, board members or county council members) it is called a public landfill owned by the citizens of Horry County. It can’t be both and it will be interesting to see what it is determined to be in court.

Because, in that determination lies the rub of the decision. If the SWA is private, the county established a monopoly for one private corporation at the expense of others. That would be clearly unconstitutional because it runs counter to even the United Haulers U.S. Supreme Court decision that the county quotes as its right to mandate a garbage monopoly.

But, even if the SWA is determined to be a public agency, the Texas decision concludes a similar situation in Dallas is unconstitutional because it runs much more to Carbone than Pike, references to two other flow control decisions by the Supreme Court.

The judge on the county’s federal lawsuit has made a similar statement in an earlier hearing on the case.

Regardless of how that decision is made, several things are certain about the SWA:

The SWA has managed to amass at least $35 million in cash reserves over its 20+ years of existence, something that would be looked at very closely by the IRS if a Form 990 was filed every year.

The SWA says elimination of its monopoly on county garbage would cost the authority $600,000 and its fees would have to be raised as a result. Last year, it spent approximately $500,000 in lobbying and legal fees to defend the flow control ordinance in court and against proposed legislation in the General Assembly. Why spend nearly the same amount in fees as is realized in revenue?

Horry County is the only county in the state that sees a need to exercise a government established monopoly over its garbage.

The citizens of Horry County have never seen a real financial benefit from either the SWA’s ability to amass cash or its success in killing free market competition in the garbage business.