The Commerce Clause of the U.S. Constitution gives Congress the power "to regulate Commerce ... among the several states." At the same time, the U.S. Supreme Court has identified a negative or "dormant" aspect of the Commerce Clause that limits state and local authority to enact laws that interfere with such commerce.

In 1978, the high court recognized that interstate transportation of solid waste was "commerce" within the meaning of the Commerce Clause. The justices struck down a New Jersey regulation that banned the disposal of waste that originated outside the state. While the state could restrict access to its diminishing landfill capacity, the court said, it could not do so by forbidding only out-of-state waste.

As state and federal mandates forced localities to build and operate sophisticated, environmentally-sound waste processing and disposal facilities, local officials spent hundreds of millions of dollars through long-term financial commitments. Ultimately, the financial success of these solid waste initiatives was based on the abili ty of local governments and waste authorities to guarantee a certain waste volume and corresponding revenue at their facilities. Enter the "flow control" ordinance, requiring haulers to transport locally generated waste to transfer stations, landfills or other sites chosen by local officials.

When does a flow control ordinance or other governmental activity violate the dormant Commerce Clause? Initially, it depends on whether the government is "regulating" the market or simply "participating" in it. If a city, county or waste authority buys or sells goods or services in a similar way that any private party might, then it is considered a "market pmiicipant," and the activity is not subject to the Commerce Clause. Local government may choose with whom it does business, negotiate the terms on which it will do business, and implement its ntrepreneurial goals. But ifthe government activity amounts to "regulation" of the interstate market in solid waste or solid waste services, then the issue becomes whether the government activity (a) discriminates against interstate commerce or (b) regulates evenhandedly with only "incidental" effects on interstate commerce.

As a rule, discrimination means favorable treatment of in-state economic interests at the expense of out-of-state interests. If a court finds that a local law discriminates against nterstate commerce, the local government must prove that it has no non-discriminatory alternative methods to promote its legitimate local objectives. Few discriminatory actions have been able to pass this test. But even when a municipal solid waste system regu lates evenhandedly -- that is, with minimal, if any, extra burdens on out-of-state businesses -- a comi will evaluate the activity under a so-called "balancing test": Are the burdens, if any, on commerce excessive in relation to the legitimate local benefits?