United States District Court, W.D. Kentucky, Louisville
LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT WASTE MANAGEMENT DISTRICT PLAINTIFF
WASTE MANAGEMENT OF KENTUCKY. LLC DEFENDANT
CHARLES R. SIMPSON III, SENIOR JUDGE UNITED STATES DISTRICT
case arose from a claim by plaintiff Louisville/Jefferson
County Metro Government Waste Management District
(hereinafter “the District”) that defendant Waste
Management of Kentucky, LLC (hereinafter “WMK”)
has been underpaying the landfill license fee owed to the
County for at least thirteen years, a claim which WMK
staunchly denies. The action seeks (1) recovery of unpaid
portions of landfill license fees with prejudgment interest;
(2) a declaration of the rights and obligations between the
parties, presently and going forward, with respect to
Louisville Metro Code of Ordinances (“LMCO”)
§ 51.001, et seq. (LMCO Chapter 51, herein
generally “the Ordinance, ” and specific sections
and subsections, as specified) under which the license fee is
imposed; and (3) an accounting of gross receipts of
WMK. This matter is presently before the court for
consideration of cross-motions for summary judgment.
parties agree that there is no genuine issue of material fact
concerning how WMK made its quarterly calculation of the
gross receipts subject to the landfill license fee and its
rationale for its method of calculation. The question is
whether WMK has paid the appropriate amount in satisfaction
of the Ordinance’s requirements and whether the
District may recover the amounts underpaid, if any.
initial matter, WMK asserts that the Ordinance is invalid and
unenforceable in violation of the “Home
Rule.” WMK contends that the Ordinance exceeds
the authority granted to the County by statute and contains
irreconcilable discrepancies which render it infirm.
Additional WMK urges that the County’s prior course of
conduct bars the District from recovering on a claim for
underpaid fees. Finally, it contends that any claim which
seeks to reach beyond May 17, 2012 is barred by the
applicable statute of limitations.
parties filed an Agreed Statement of Facts, accompanied by a
number of exhibits (DN 27). The cross-motions for summary
judgment addressing those facts are now ripe for decision.
Agreed Facts, in pertinent part
owns and operates the Outer Loop Recycling & Disposal
Facility (“Outer Loop Facility”). Agreed
Statement of Facts, ¶ 27, p. 1, ¶ 1. It was opened in
1969 and currently covers 782.10 acres, of which 518.30 acres
are permitted for solid waste disposal in a landfill.
Id. WMK engages in various activities on the
property including disposal of solid waste, waste water
treatment, composting, and capture of renewable natural gas.
Id. These activities are permitted by the Kentucky
Department for Environmental Protection, Division of Waste
Management (“KDEP”). DN 27, ¶ 2. An
“aerial map” appended to the Agreed Statement of
Facts depicts the Outer Loop Facility as of January 2018. DN
27, ¶ 5; Ex. 1. The exhibit consists of an aerial
photograph with superimposed notations identifying various
points on the property such as “Compost Operations,
” “Waste Water Treatment Facility, ” and
“Renewable Gas Facility.” There is no physical
point or boundaries designated as “Landfill.”
There is no legend or scale. The exhibit appears to be
offered for illustrative purposes only.
68.178, referred to by the parties as the “enabling
statute, ” authorizes Kentucky counties to license the
operation of off-site waste management facilities including
landfills and permits them to charge a fee for these
licenses. DN 27, ¶ 8. The text of the enabling statute is set
out in section II below.
Metro Government adopted Chapter 51 of the Louisville Metro
Code of Ordinances pursuant to statute KRS 68.178. Ordinance
No. 44 (the “Ordinance”) repealed Chapter 51
relating to solid waste management and reenacted it as set
forth in full in the Ordinance. DN 27, ¶ 10; Ord. No.
44, Series 2005, Section III. This version of Chapter 51 is
the Ordinance in issue in this case.
pays annual license fees for landfill operations, composting
operations, and hauling/transportation operations pursuant to
the Ordinance. DN 27, ¶ 6. The fee for composting
consists of a $100 application fee and a $100 annual renewal
fee. The fee for waste hauling is $100 per year plus $10 per
waste collection vehicle operated by the licensee. The fee
for landfill operations is 5% per annum of the
facility’s gross receipts. § 51.201(A) and (B). DN
27, ¶ 10.
51.001 of the Ordinance defines “Gross Receipts”
as “[t]he total amount of money or value or other
consideration received or generated by engaging in the
business or businesses defined in this Ordinance before any
deductions related to the cost of doing business.”
August of 2011, in a meeting of the District’s Advisory
Committee, the “vagueness of the definition of Gross
Receipts [in § 51.001] as it pertains to certain
facilities” was raised and discussed. DN 27, ¶ 34;
Meeting Minutes, Ex. 3. The Minutes indicate that
“Discussion centered around the types of material and
services that should be included in ‘Gross
Receipts’ so that it encouraged ‘reuse’ and
‘recycling’ of solid waste but still captured
what was due.” Id. In November of 2015, the
District Advisory Committee Group A was tasked with drafting
language to potentially better define the term “Gross
Receipts.” DN 27, ¶ 35. The issue was researched,
and the resulting report indicated that “in Jefferson
County Gross Receipts are defined as any and all monies take
[sic] in through business operations, sales, and services
provided. Gross receipts are calculated before any deductions
for business expenses have been made. There are no approved
deductions for gross receipts.” DN 27, Ex. 4. No update
to the Ordinance was approved or enacted. DN 27, ¶ 35.
The definition of “Gross Receipts” remains
past thirteen years, WMK has submitted quarterly reports in
connection with payment of the 5% license fee to the
District, as required by § 51.204. DN 27, ¶ 14.
Each report included a notation concerning WMK’s method
of calculating the gross receipts subject to the fee:
Gross receipts are less receipts for recyclables, compost,
revenue generating cover, bioremediation of petroleum
contaminated soils, pretreatment facility (non-hazardous
waste), non-hazardous liquid waste added to the bioreactor
landfill, hauling (brokerage), container liners, weighing of
vehicles, analytical, appliances, tire chips, fuel surcharge,
landfill gas sales, the Old City of Louisville waste, and
adjustments for billing corrections.
consistently excluded sums in fifteen specific categories,
identified by line item in the spreadsheets appended to the
parties’ Agreed Statement of Facts, (DN 27, Ex. 2), in
reaching its quarterly report figures and the District has
accepted WMK’s payments, never questioning the
calculations until 2016. DN 27, ¶¶ 15, 32, 33.
of 2016, the District notified WMK for the first time that it
believed WMK was underpaying the landfill license fee. DN 27,
¶ 36. The parties attempted to resolve their
disagreement concerning how the landfill license fee should
be calculated, but negotiations were unsuccessful.
Id. The District filed a complaint in the Jefferson
County, Kentucky, Circuit Court on May 11, 2017 seeking to
end the impasse. The matter was removed to this Court under
our diversity jurisdiction. DN 27, ¶ 37.
Ordinance and its Enabling Statute
pertinent provisions of the enabling statute, KRS 68.178, are
68.178. County license fee for off-site waste
management facilities – Use of proceeds.
(1) The fiscal court of any county may license off-site waste
management facilities located within the county with the
imposition of a license fee at a percentage rate not to
exceed two percent (2%) per annum of the gross receipts of
such a waste management facility owned or operated by
self-employed individuals, partnerships, or corporations. The
proceeds from the license fee shall be used to defray the
general revenue requirements of the county where the facility
is located. For purposes of assessing the license fee
provided for in this section, off-site waste management shall
consist of establishing and operating a facility whose
principal purpose is treatment, storage, disposal, or a
combination of these activities…
(2)(a) The fiscal court of a county, or an urban-county
council of an urban-county government may license a solid
waste landfill located within the county or urban-county
area. The license fee may be set at not less than one cent
($0.01) but no more than fifty cents ($0.50) per ton of waste
received by the landfill or set at up to five percent (5%) of
gross receipts of the landfill…
(c) The proceeds from the license fee shall be used to defray
the government services provided to the landfill, necessary
clean-up operations or emergency response related to
operation of the landfill or transporting waste to the
landfill, necessary maintenance, improvement or construction
of roads, and for the general revenue requirements of the
county or urban-county government where the landfill is
(d) …The fee provided for in this subsection shall be
in lieu of the provisions of subsection
Ordinance contains the following provisions:
WASTE MANAGEMENT DISTRICT
§ 51.100. CREATION OF DISTRICT.
(A) There is a Waste Management District, which was created
pursuant to KRS 109.041(13), KRS 109.115 and KRS 67.083(3),
which includes in its jurisdiction all territory within the
borders of the County and shall be called
“Louisville/Jefferson County Metro Government Waste
Management District.” § 51.105. POWERS AND
DUTIES OF WASTE MANAGEMENT DISTRICT.
(A) The Waste Management District shall have those powers and
duties assigned to solid waste management districts under KRS
Chapter 68.178 and 109 and 224…which powers include,
but are not limited to, the powers and duties set forth in
… (H) The right to charge reasonable fees and rentals
for providing and/or regulating solid waste management
facilities in order to finance the district’s
operations, service its indebtedness and provide adequate
funds for facility replacement. KRS 68.178 provides that the
fiscal court of any county may license off-site waste
management facilities located within the county with the
imposition of a license fee. Therefore, pursuant to KRS
67C.101, the Metro Government has the authority to impose
license fees. The Metro Government has assigned to the
Louisville/Jefferson County Waste Management District all
powers or duties given to it by KRS 68.178[.]
OFF-SITE WASTE MANAGEMENT FACILITIES
§ 51.200. LICENSING.
(A) All persons involved in the business of operating an
off-site waste management facility within the County shall be
licensed with the District pursuant to regulations duly
adopted by the Board of Directors.
(B) The off-site waste management facility license shall
consist, in part, of the filing of a quarterly report with
the District pursuant to regulations duly adopted by the
Board of Directors.
(C) Types of Facilities:
(1) Off-site waste management facilities shall be classified
and licensed in one of more of the following categories:
(b) Solid Waste Management Facility other than a landfill;
(c) Waste Disposal Facility other than a landfill;
(d) Recycling Facility; or
(e) Composting Facility.
§ 51.201. FEE SCHEDULE.
(A) Pursuant to the authority granted by KRS 68.178(1) and in
conformity with the home rule power granted to Metro
Government, there is hereby imposed an annual license fee for
the operation of a recycling facility, solid waste management
facility, landfill [or] waste disposal facility, or other
waste management business.
(B) The fees for these specific licenses are as follows:
Type of Facility
5% per annum of the facility’s gross receipts
Waste Disposal Facilities, other than a landfill or
2% per annum of the facility’s gross receipts
Solid Waste Management Facilities
2% per annum of the facility’s gross receipts
Recycling and Composting Facilities
$100 application fee and $100 annual renewal fee
$100 a year plus $10 per truck
(C) No license fees may be collected from the Metro
Government solid waste collection trucks hauling solid waste
to a landfill or transfer station and the license fees
provided for in this Section shall not be collected from a
landfill or transfer station on solid waste brought into a
landfill or transfer station by Metro Government trucks.
LICENSE APPLICATIONS, FEES AND REPORTS
§ 51.204. LANDFILL.
(A) Landfill License Application.
(1) An applicant for a license to operate a landfill shall
apply to the Department, at its designated address.
…(B) Landfill License Fee:
…(2) The licensing fee shall be determined by
multiplying the gross receipts of the facility in each
quarter of the year by up to five (5%) percent.
…(C) Required Reporting:
(1) The licensee shall file a quarter-annual report with the
Department which shall accompany payment of the ...