author: STANLEY S. HARRIS, District Judge.

text:
    PUERTO RICO MARITIME SHIPPING AUTHORITY, Plaintiff, v. Elizabeth Hanford DOLE, Secretary of Transportation; Harold E. Shear, Maritime Administrator; Warren G. Leback, Deputy Maritime Administrator; and Maritime Administration, United States Department of Transportation; United States Department of Transportation, Defendants, Aeron Marine Shipping Co., Aries Marine Shipping Co., Atlas Marine Co., Aquarius Marine Co., American Shipping, Inc., Pacific Shipping, Inc., and North Oil Transport Co., Defendant-Intervenors. MATSON NAVIGATION COMPANY, INC., Plaintiff, v. The UNITED STATES of America and Elizabeth Hanford Dole, Secretary of Transportation, Defendants. AMERICAN MARITIME ASSOCIATION, Plaintiff, v. The UNITED STATES of America; Elizabeth Hanford Dole, Secretary of Transportation; Harold E. Shear, Maritime Administrator; and Warren G. Leback, Acting Maritime Administrator, Defendants.
    Civ. A. Nos. 85-660, 85-679 and 85-680.
    United States District Court, District of Columbia.
    Aug. 1, 1985.

      Amy Loeserman Klein, William E. Cohen, Washington, D.C., for plaintiff.
    John H. Bayly, Jr., Asst. U.S. Atty., Washington, D.C., for defendants.
   MEMORANDUM OPINION AND ORDER

STANLEY S. HARRIS, District Judge.

These three consolidated cases are now before the Court on the motion of the plaintiff Puerto Rico Maritime Shipping Authority (PRMSA) for a preliminary injunction, the motion of the defendant-intervenors Aeron Marine Shipping Company, et al. (Aeron) for summary judgment, the motion of the federal defendants to dismiss, or alternatively, for summary judgment, and the motion of the plaintiffs American Maritime Association (AMA) and Matson Navigation Company (Matson) for injunctive relief and summary judgment. The plaintiffs seek judicial review of an opinion and order issued by the Secretary of Transportation on December 17, 1984, and a subsequent order on remand issued by the Acting Maritime Administrator on February 7, 1985. Plaintiffs challenge the approval under § 805(a) of the Merchant Marine Act, 46 U.S.C. § 1223(a), of the applications of seven companies (Aeron) operating subsidized tankers in foreign commerce for permission to affiliate with an entity that owns and proposes to operate a roll-on/roll-off vessel, ATLANTIC SPIRIT, in the domestic trade. Plaintiffs ask for a declaratory judgment and injunction prohibiting the operation of the ATLANTIC SPIRIT between destinations in Hawaii, Alaska, and Puerto Rico and destinations in the contiguous United States unless the defendants suspend payment of an operating-differential subsidy (ODS) to Aeron (or any affiliate, subsidiary, or holding company).

I. Background of the Controversy

The Merchant Marine Act of 1936, as amended, 46 U.S.C. § 1101 et seq., differs in its treatment of foreign and domestic commerce. Ships operated in domestic commerce must be built in the United States, documented under the laws thereof, predominantly staffed with United States crews and officers, and owned by United States citizens. Ships in domestic commerce compete only against other ships with equal constraints and the consequent costs of compliance. In contrast, the Act imposes no protective restrictions to ships operating in foreign commerce. Therefore, in order to offset the disadvantage of higher shipbuilding and operating costs of United States vessels built in the United States, the Merchant Marine Act provides subsidies to make the United States Merchant Marine competitive in the foreign trades. Domestic carriers such as the plaintiffs do not receive any federal subsidies.

To avoid unfair competition between subsidized and non-subsidized vessels, Congress provided that subsidized vessels could not operate in domestic trades except under limited circumstances with certain safeguards. Specifically, § 805(a) of the Merchant Marine Act states:

It shall be unlawful to award or pay any subsidy to any contractor under authority of subchapter YI of this chapter, or to charter any vessel to any person under subchapter VII of this chapter, if said contractor or charterer, or any holding company, subsidiary, affiliate, or associate of such contractor or charterer, or any officer, director, agent, or executive thereof, directly or indirectly, shall own, operate, or charter any vessel or vessels engaged in the domestic inter-coastal or coastwise service, or own any pecuniary interest, directly or indirectly,
in any person or concern that owns, charters, or operates any vessel or vessels in the domestic intercoastal or coastwise service, without the written permission of the Secretary of Transportation. Every person, firm, or corporation having any interest in such application shall be permitted to intervene and the Secretary of Transportation shall give a hearing to the applicant and the intervenors. The Secretary of Transportation shall not grant any such application if the Secretary of Transportation finds it will result in unfair competition to any person, firm, or corporation operating exclusively in the coastwise or intercoastal service or that it would be prejudicial to the objects and policy of this chapter: Provided, That if such contractor or other person above-described or a predecessor in interest was in bona-fide operation as a common carrier by water in the domestic, intercoastal, or coastwise trade in 1935 over the route or routes or in the trade or trades for which application is made and has so operated since that time or if engaged in furnishing seasonal service only, was in bona fide operation in 1935 during the season ordinarily covered by its operation, except in either event, as to interruptions of service over which the applicant or its predecessor in interest had no control, the Secretary of Transportation shall grant such permission without requiring further proof that public interest and convenience will be served by such operation, and without further proceedings as to the competition in such route or trade.
If such application be allowed, it shall be unlawful for any of the persons mentioned in this section to divert, directly or indirectly, any moneys, property, or other thing of value, used in foreign-trade operations, for which a subsidy is paid by the United States, into any such coast-wise or intercoastal operations; and whosoever shall violate this provision shall be guilty of a misdemeanor.

46 U.S.C. § 1223(a). Under the statute, then, no application for participation in the domestic trades shall be granted if the Secretary of Transportation finds it will result in unfair competition to any person, firm, or corporation operating exclusively in the coastwise or intercoastal service or that it would be prejudicial to the objects and policy of the Act.

In 1982, Acadian Shipping Corporation, an unsubsidized company affiliated with Aeron and six other ODS contractors, applied for permission to own and operate the ATLANTIC SPIRIT in domestic trade. The application sought permission covering the entire domestic trade, although the only intended operation was to be along the Atlantic coast. Several parties intervened, including each of the plaintiffs, and participated in the application process before an Administrative Law Judge. The ALJ concluded that since none of the ODS money received by Acadian affiliates would likely be diverted to the ATLANTIC SPIRITS operation, the granting of the application would not result in unfair competition. Diversion would be impossible, according to the AU, because (1) the subsidy paid for out-of-pocket expenses already incurred, (2) the domestic vessels were operated separately from the foreign subsidized vessels, and (3) no residual subsidy would remain passively after proration from the subsidized operations to assist the separate unsubsidized operation.

The AU went on to hold, nevertheless, that the grant of the application in regard to the trade between Puerto Rico and the United States would result in prejudice to the objects and policy of the Act. Operation in other domestic trades was permitted but limited to three years. The AU relied on a stipulated factual scenario that if the ATLANTIC SPIRIT were operated in the Puerto Rico trade, it would always operate at 100% capacity and would draw all its cargo from cargo presently carried by PRMSA. Under the stipulation, the AU found that PRMSA’s financial losses would increase and if PRMSA were thereby forced to cease operations the long-term prospects were for the eventual elimination of the current level of service to Puerto Rico. The AU found that the trade was highly competitive and currently over-ton-naged with the result that existing carriers had net losses or only minimal profits.

Upon review, the AU’s initial decision was affirmed by the Maritime Administrator. The Administrator considered whether unfair competition could result from factors other than diversion of subsidy funds, but found that there was no evidence that the ATLANTIC SPIRIT’S owners would benefit from an inherent stability resulting from affiliation with subsidized operators or that below-cost cutthroat rates would be offered by the ATLANTIC SPIRIT. He went on to conclude that the AU was correct in his reliance on evidence of adverse impact upon existing operators and upon service to Puerto Rico in reaching his conclusion as to prejudice to the objects and policy of the Act. Finally, the Administrator held that there was no evidence that operation of the ATLANTIC SPIRIT in the Alaskan and Hawaiian trades would not also result in prejudice to the objects and policy of the Act. Therefore, he denied permission to operate in the Puerto Rican, Alaskan, and Hawaiian trades.

After the ATLANTIC SPIRIT was purchased, Aeron petitioned the Secretary of Transportation for review of the Administrator’s decision. The Secretary elected to review the decision despite PRMSA’s argument for dismissal on the grounds that the Secretary had delegated final decision making authority to the Administrator without reservation. The Secretary overturned the Administrator’s decision as to Alaska and Hawaii and remanded as to Puerto Rico. She found that Aeron had been erroneously subject to the burden of proving a negative, i.e., that operation of the ATLANTIC SPIRIT would not prejudice the objects and policy of the Act. She found that the correct placement of the burden of proof was only initially with Aer-on to show that its domestic vessels would not benefit from ODS funds; the burden then shifted to PRMSA or any other inter-venor to show that the overall service to the trade would be harmed. This was, in effect, a new standard for determining prejudice to the Act’s objects and policy since it looked to the long-term adverse impact upon projected service in the trade as a whole rather than the immediate impact upon the existing individual vessel operators. She went on to find that, under this standard, the previous decisions contained insufficient evidence to support the findings of long-term adverse impact. Accordingly, she remanded the case to the Administrator solely for the purpose of determining whether the record contained evidence to support the AU’s and Administrator’s findings.

On remand, the Administrator held that the record had no such evidence and, in accordance with the Secretary’s instructions, he granted Aeron’s application for operation of the ATLANTIC SPIRIT in the United States/Puerto Rico trade.

The instant action was filed February 25, 1985. PRMSA’s motion for a temporary restraining order was denied and the Court consolidated for hearing PRMSA’s motion for a preliminary injunction and all of the parties’ opposing dispositive motions.

II. Procedural Challenge

A. The Secretary’s Authority

Section 805(a) provides the Secretary of Transportation the authority to grant or deny applications filed under that section. The Secretary delegated broad authority to the Maritime Administrator to carry out the Merchant Marine Act except for those functions expressly delegated to the Maritime Subsidy Board. See 49 C.F.R. §§ 1.66, 1.67. PRMSA contends that the lack of reservation of Secretarial review authority and of specific procedures for review with regard to actions of the Administrator, in contrast to the actions of the Board, preclude the Secretary from reviewing the Administrator’s actions in this case.

In her opinion of December 17, 1984, the Secretary stated that it “has been the long established and consistently followed position of the Department of Transportation that the decisions of each of its Administrators are subject to Secretarial review, unless statute or regulation specifically deprive the Secretary of this right of review.” She conceded that authority for day-to-day policy decisions in this specific program area had been delegated to the Administrator, but she asserted her continuing “responsibility of carrying out the duties of section 805(a)” and “the added responsibility of providing policy leadership in transportation matters for the entire Department, 49 U.S.C. 301.”

The Court agrees with the Secretary’s characterization of her overriding authority in matters of transportation policy. While there is no question that the authority for the day-to-day administration of the Merchant Marine Act has been delegated, what has not been and cannot be delegated and what has been exercised by the Secretary in this case is her authority over the policy and direction of the Transportation Department. The Secretary did no more than provide the Administrator with an interpretation of § 805(a) in line with the policies currently directing the Transportation Department. She did not set aside the Administrator’s decision. Instead, she directed the Administrator to re-examine the evidence to be certain that it supported PRMSA’s claim that there would be a long-term adverse impact upon service in the Puerto Rico trade if the ATLANTIC SPIRIT began operating. This was a minimal interference with the Administrator’s delegated authority. Furthermore, since the Administrator made the final decision upon review of the evidence no substantial rights of PRMSA were violated.

The Secretary’s delegation of authority was not intended to confer procedural benefits.

[I]t is always within the discretion of ... an administrative agency to relax or modify its procedural rules adopted for the orderly transaction of business before it when in a given case the ends of justice require it.”

American Farm Lines v. Black Ball Freight Service, 397 U.S. 532, 539, 90 S.Ct. 1288, 1292, 25 L.Ed.2d 547 (1970) (citations omitted). The delegation merely promoted administrative efficiency. Where, as here, national transportation policy is directly affected, the ends of justice require a relaxation of the usual procedure.

The cases cited by PRMSA which disallowed modification are distinguishable in that the important procedural benefits derived from the delegations involved in those cases justified the strict adherence to the separation of authority. In Service v. Dulles, 354 U.S. 363, 77 S.Ct. 1152, 1 L.Ed.2d 1403 (1957), the Supreme Court upheld a regulatory procedure created specifically to protect the rights of employees undergoing loyalty and security cheeks. Similarly, in United States ex rel. Accardi v. Shaughnessey, 347 U.S. 260, 74 S.Ct. 499, 98 L.Ed. 681 (1954), the Court found that due process had been denied when the Attorney General issued a list of people he wanted deported before the Immigration Board had exercised the independent discretion delegated to it to make immigration decisions. Finally, in United States v. Nixon, 418 U.S. 683, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974), Congress established and the Supreme Court upheld a unique delegation of authority to the Special Prosecutor to allow him to exercise his judgment independent of the influence of the Attorney General or the President during the Watergate trials.

In an attempt to show that procedural rights were sacrificed when the case was reviewed by the Secretary, PRMSA raises the possibility of ex parte dealings between the defendants. Since there are no Secretarial review procedures for decisions of the Maritime Administrator, PRMSA expresses its anxiety that the Agency may not have felt itself bound by any constraints so as to keep the Secretarial review process fair. As the basis for its fear, PRMSA cites a statement from the Government’s brief indicating that the ATLANTIC SPIRIT was sold to Aeron “subject in part, to final disposition of the Section 805 dispute.”' This, PRMSA suggests, reflects Aeron’s unwillingness to buy unless the dispute was resolved in their favor.

The Court first finds that the statement does not reflect a contingency on the sale. The owners of the ATLANTIC SPIRIT imposed no conditions on their purchase. Though somewhat inartfully worded, the statement merely reflects that the vessel remained subject to the disposition of the § 805(a) application after its sale to Aeron’s affiliate. The Court further finds that PRMSA has not shown convincingly that such ex parte contacts occurred or that the Secretary did not follow the regulations against ex parte contacts applicable to other instances of Secretarial review. See, e.g., 46 C.F.R. Part 202.

B. Denial of Full and Fair Hearing

PRMSA contends that it was denied due process because of “unreasonable time strictures, the denial of discovery of information which the Administrator ultimately deemed central to PRMSA’s required showing, and the arbitrary rejection, without explanation, of PRMSA’s petition to reopen for consideration of new and highly relevant facts concerning unfair competition.”

The Court has considered the time schedule under which discovery was conducted. The hearing process was somewhat foreshortened in that the Administrative Law Judge was directed to conduct a hearing and render a decision within 45 days. The Administrator later granted an extension of 30 days for discovery.

The Court finds that the discovery deadlines were reasonable in light of the circumstances of the case. Aeron’s application was a part of a previous proceeding which was later withdrawn in which PRMSA had intervened. Extensive discovery had already been accomplished on relevant § 805(a) issues in the previous case. While certain issues involved in the new application had not been addressed, PRMSA has not established a need for discovery beyond that accomplished in the additional time period allowed by the Administrator.

PRMSA asserts several areas into which it would have liked to conduct discovery such as the financial records of Aeron’s unsubsidized vessels. The Court finds that such discovery would have been cumulative and tangential. Some of the information could have been obtained through extrapolation of PRMSA’s own operating costs. In other areas, PRMSA was given wide latitude for discovery. For example, it was free to analyze 15,000 pages of Aeron’s financial records. While discovery must be granted where a refusal to do so would so prejudice a party as to deny him due process, “[tjhere is no basic constitutional right to pretrial discovery in administrative proceedings.” McClelland v. Andrus, 606 F.2d 1278, 1286 (D.C.Cir.1979); Silverman v. Commodity Futures Trading Comm’n, 549 F.2d 28, 33 (7th Cir. 1977). The Court concludes that PRMSA was not prejudiced by the Administrator’s discovery rulings and there was no abuse of his discretion in making such rulings. There was sufficient discovery such that the relevant information was before the parties and the agency in considering this case.

Another of PRMSA’s procedural contentions is that the Secretary ignored its unfair competition claims when she accepted review of the matter. It bases this contention on the fact the Secretary made no mention of the unfair competition issue in her Opinion and Order. The Court concludes that the Secretary’s determination that these specificclaims did not constitute a significant legal or policy' question was within her discretion to determine the scope of review.

PRMSA’s final improper procedural contention challenges the Administrator’s denial of PRMSA’s request to reopen the record upon remand. PRMSA alleges that the record should have been reopened for additional evidence as to the issue of unfair competition when it became known that Pacific Shipping, Inc., a subsidized entity owned by Aeron, would become a part owner of Acadian, the company operating the ATLANTIC SPIRIT. This change in the financial arrangement occurred after the record closed.

The Administrator denied PRMSA’s petition without explanation, stating that the matter was not properly before him. Based on the Secretary’s limited review of specified issues, which did not include unfair competition, the Administrator exercised his discretion and issued the denial. The reopening of agency records is a matter entrusted to agency discretion. See Delta Air Lines, Inc. v. C.A.B., 561 F.2d 293, 306-07 (D.C.Cir.1977). The Court finds no abuse of this discretion since there was no compelling cause to reopen. First, as noted by the Administrator on remand, the Maritime Subsidy Board had authorized Pacific Shipping to terminate its ODS contract when it completed the existing voyages prior to delivery of the subsidized vessel to the Navy, which was to be in the near future. Pacific Shipping was going to use the proceeds from the sale of the subsidized vessel to repay the loans for the purchase of the ATLANTIC SPIRIT, which is an indirect investment of the same type already examined and approved by the agency and the Court. Second, the Court agrees with the defendants’ characterization of Pacific Shipping’s influence on and interest in the ATLANTIC SPIRIT as little more than that of a stockholder. The Court agrees that Pacific “is a limited partner in a limited partnership which is one of the general partners of Acadian, the owner of the vessel.”

III. The Merits

Section 805(a) would disallow the payment of a subsidy to any firm that indirectly or directly owns or operates any vessel engaged in the domestic trades or who owns any pecuniary interest, indirectly or directly, in any concern that owns, charters, or operates any vessels in the domestic trades unless the Secretary gives written permission. The application for permission will not be granted if the Secretary finds that (1) it will result in unfair competition to any person, firm, or corporation operating exclusively in domestic trade, i.e., unsubsidized vessels, or (2) it would be prejudicial to the objects and policy of the Act.

A. Unfair Competition

PRMSA repeatedly raised the issue of unfair competition throughout the administrative proceeding but, as discussed previously, the Secretary did not accept it for review. The ALJ found that unfair competition would not result if Aeron’s application were granted because there was no possibility of subsidy diversion to domestic operations. The Administrator looked beyond the diversion to other factors that could result in unfair competition but found no evidence of such. The Secretary determined that § 805(a) “was primarily designed to prevent unsubsidized carriers from diverting their ODS funds to vessels in the domestic trade, so as to prevent unfair competition with unsubsidized vessels in that trade.”

PRMSA has brought the issue of unfair competition once again for this Court to consider. PRMSA alleges that there is a likelihood of diversion from Aeron to its unsubsidized affiliates and that beyond diversion, an inherent advantage of stability will inure to the benefit of the affiliates from Aeron’s subsidized status such that unfair competition will result.

The current interpretation of the unfair competition clause requires a causal link between the alleged unfair competition and the subsidy received by the affiliate. That is, some part of the subsidy must be passed onto the domestic operation and a benefit must be conferred thereby sufficient to result in unfair competition. See Pacific Far East Line v. F.M.B., 275 F.2d 184, 186 (D.C.Cir.1960), cert. denied, 363 U.S. 827, 80 S.Ct. 1597, 4 L.Ed.2d 1523 (1960); Matson Navigation Co. v. Connor, 258 F.Supp. 144, 155 (N.D.Cal.1966), aff'd per curiam, 394 F.2d 514 (9th Cir.1968). Advantages of subsidized companies which are unrelated to subsidy diversion are irrelevant to the determination of unfair competition. Were it otherwise, no § 805(a) application could ever be approved because every subsidized company’s affiliate would be an unfair competitor.

The Court finds that PRMSA’s allegations of unfair competition do not specifically concern or demonstrate subsidy or subsidy-related transfers of funds. For example, if any diversions are made possible by Aeron’s structure they would consist of non-subsidy funds since residual subsidy funds cannot remain passively to be transferred to non-subsidized vessels. It follows, then, that non-cost based payments for services rendered by non-subsidized vessels are not violative of § 805(a) since the payments would not be from subsidy funds. As to the inherent stability gained from affiliation with Aeron, PRMSA assumes that subsidy payments will guarantee profitability for Aeron such that it and its affiliates will gain long-term staying power. PRMSA does not explain how profitability is guaranteed when the subsidies merely offset costs not incurred by foreign competitors, thereby allowing American vessels to compete as any other ship in the foreign trade. Neither it nor Aeron is guaranteed profits. PRMSA also does not demonstrate convincingly that Aeron’s domestic affiliate will benefit from Aeron’s stability. Finally, PRMSA did not explain how whatever stability indirectly gained from Aeron would outweigh the direct subsidies which PRMSA receives from Puerto Rico such that unfair competition would result.

B. Objects and Policy

Beyond unfair competition, prejudice to the objects and policy of the Merchant Marine Act mandates the denial of a § 805(a) petition. As guidance, the Act’s Declaration of Policy states at § 101:

It is necessary for the national defense and development of its foreign and domestic commerce that the United States shall have a merchant marine (a) sufficient to carry its domestic water-borne commerce and a substantial portion of the water-borne export and import foreign commerce of the United States and to provide shipping service essential for maintaining the flow of such domestic and foreign water-borne commerce at all times. * * * It is declared to be the policy of the United States to foster the development and encourage the maintenance of such a merchant marine.

Thus, the Secretary must determine how entry of the vessel would affect the goal of maintaining the flow of domestic commerce at all times. The Court disagrees with Aeron’s interpretation of the objects and policy clause which would allow review of the vessel’s effect only to the extent it results from subsidy funds. While the aspect of subsidy funds is important to the determination of unfair competition, the causal link need not be shown again with regard to the objects and policy clause. Once it is determined that subsidy funds do not benefit the unsubsidized affiliates vessel, the Secretary must look to the effect of the entry of the vessel itself on the trade. To read § 805(a) otherwise would be to read the objects and policy clause out of the section, because once subsidy transfers are found to be improbable under the unfair competition clause, it is a foregone conclusion that they will have no effect on the domestic trade. The possibility of subsidy transfers merely trips the trigger of a § 805(a) analysis such that the entry of the vessel is subject to more careful scrutiny. See Opinion and Order, Secretary of Transportation at 7 n. 3 (Dec. 17, 1984) (Record at 3821).

It is well settled that § 805(a) should not be used to protect existing domestic operators from fair competition posed by new entrants to the trade, even if the new entrants are affiliates of subsidized operators. See, e.g., Pacific Far East Line v. F.M.B., 275 F.2d at 186; American Export Isbrandtsen Lines, Inc., 9 SRR 997 (MSB/MA 1968). With pro-competitive principles in mind, the Secretary determined that the appropriate inquiry under the objects and policy clause was whether entry would result in a long-term significant adverse impact on projected service in the affected trade. As PRMSA asserts, short-term economic dislocation or a temporary adverse impact may result from an approved entry under the Secretary’s standard. However, the Secretary has shown that the long-term view is more likely to accomplish the objectives of the Act. At the present time, the domestic service in Puerto Rico is overtonnaged, unstable, and inefficient. A short-term disruption resulting from the addition of an efficient competitor may result in a more vigorous merchant marine such that the domestic trade is better served. It is well within the Secretary’s broad and substantial discretion in administering the Act to determine that the best way to achieve the objects and further the policy of the Act is by increasing the opportunity for competition in the domestic trades with an eye to the long-term effect.

The Secretary correctly placed the burden of proof on the intervening parties, PRMSA, Matson, and AMA, to show prejudice to the objects and policy of the Act. The AU had initially placed the burden with them but the Administrator reversed the AU. The Court agrees with the Secretary’s conclusion that while the initial burden of proof to show that the proposed domestic operation will not result in unfair competition should be on the applicants, the burden should shift to the intervenors to prove that the proposed affiliation will prejudice the objects and policy of the Act. The Secretary reasoned that the intervenors would likely be more “able to show that the overall service to the trade will be harmed than the applicant, who may not have access to critical information regarding the capacity and financial position of the intervenors.” Furthermore, placement of the burden on the applicants would require the proving of two negative conditions, i.e., that no unfair competition would result from entry and that there would be no prejudice to the Act’s objects and policy. The Secretary’s placement of the burden is in keeping with the latest administrative decisions that specifically define the elements of a prima facie case. See, e.g., States Marine Lines, 1 SRR 325, 326c-326d (FMB 1961).

In applying the substantive standard, the Secretary determined that the evidence did not support the decisions of the AU or the Administrator. The ultimate withdrawal of PRMSA as a result of the entry of the ATLANTIC SPIRIT was never proven. Inferences were drawn from the precarious financial posture in which it presently sits and the substantial increase in losses it expected in the future. However, much of PRMSA’s arguments were based on a hypothetical assumption that the ATLANTIC SPIRIT would operate full time in the Puerto Rico trade and would transport full boatload cargoes otherwise carried by PRMSA. There was no convincing showing whether PRMSA would withdraw or go out of business or that new vessels would not enter to fill any voids consequently created. It is unreasonable to assume that insufficient shipping capacity and permanent damage to the trade would. result from any action taken by PRMSA since government studies introduced into the administrative record show that at no time during the past 30 years has there been inadequate service in the Puerto Rico trade.

In conclusion, the Secretary was fully within her discretion in her interpretation of the objects and policy clause as being concerned with the long-term adverse impact on domestic commerce. Furthermore, the burden of proving prejudice to the objects and policy of the Act was correctly placed on the intervenors. Finally, the Court concludes that the evidence was insufficient to show that the Puerto Rican shipping trade would be adversely affected by the entry of the ATLANTIC SPIRIT.

Accordingly, it hereby is

ORDERED, that the plaintiffs’ motions for summary judgment and for injunctive relief are denied. It hereby further is

ORDERED, that the defendants’ and the defendant-intervenors’ motions for summary judgment are granted and the cases are dismissed.

SO ORDERED.

      . The ATLANTIC SPIRIT, previously owned by a bankrupt carrier, was held at the time of application by the United States pursuant to a first preferred mortgage. A buyer for the vessel had been sought since foreclosure in 1978.

      . See Initial Decision, Administrative Law Judge at 21-22 (Aug. 5, 1983) (Record at 3026, 3046-47).

      . Aeron offered no detailed evidence as to the operation of the ATLANTIC SPIRIT at the hearing. The stipulation was applicable to any of the intervenors in the application process which included the three plaintiffs here. See Transcript of Prehearing Conference of April 7, 1983, at 7 (Record 477, 483); Plaintiffs Exhibit 34.

      . At the time this action began, PRMSA was operating with a cumulative deficit of $125,718,-000.

      . Final Opinion and Order, Maritime Administrator at 31-33 (Dec. 7, 1983) (Record at 3400).

      . Secretarial Order re: Request for Secretarial Review (June 29, 1984) (Record at 3628).

      . See Opinion and Order, Secretary of Transportation at 3 (Dec. 17, 1984) (Record at 3816).

      . Order on Remand from Secretary of Transportation, Maritime Administrator (Feb. 8, 1985) (Record at 3937).

      . At the time of the Secretary's review in this case, 49 C.F.R. § 1.43(a) read: "All powers and duties that are not delegated by the Secretary in this subpart, or otherwise vested in officials other than the Secretary, are reserved to the Secretary." Subsequent to the Secretary’s decision, the section was amended to add the sentence: “Except as otherwise provided, the Secretary may exercise powers and duties delegated or assigned to officials other than the Secretary."

      . See 46 C.F.R. Part 202.

      . Affidavit of Philip J. Shapiro, Vice President and Secretary of Athena Marine Shipping Company, filed Mar. 26, 1985.

      . Plaintiffs reply to opposition of defendants and of defendant-intervenors to motion for preliminary injunction and summary judgment and plaintiff’s memorandum in opposition to motions of defendants and defendant-intervenors for summary judgment at 18, filed Mar. 19, 1985.

      . Docket No. S-715.

      . Memorandum of defendant-intervenors in opposition to motion for preliminary injunction and in support of defendant-intervenors' motion for summary judgment at 43, filed March 11, 1985.

      . Opinion and Order, Secretary of Transportation at 4 (Dec. 17, 1984) (Record at 3819).


source: Caselaw Access Project

author: HUYETT, District Judge.

license: Public Domain

text:
    HANCOCK INDUSTRIES and Ace Service Corp. and Eastern Waste Removal and Charles Crumbley, Inc. and Edward Lawrenson, Inc. v. Erik J. SCHAEFFER, individually and in his official capacity as Executive Director of Chester County Solid Waste Authority and County of Chester, et al.
    Civ. A. No. 85-3158.
    United States District Court, E.D. Pennsylvania.
    Aug. 5, 1985.

      Michael F.X. Gillin, Halligan & Gillin, Media, Pa., for Victor Petaccio and Delaware County Incinerator (Solid Waste) Authority.
    Nolan N. Atkinson, Jr., Philadelphia, Pa., for plaintiffs.
    Joseph A. Tate, Stephen D. Brown, Alison M. Benders, Schnader, Harrison, Segal & Lew, Philadelphia, Pa., for J. Erik Schaeffer and Chester County Solid Waste Authority.

      Francis P. Connors, Co. Sol., Michael J. Ehling, Asst. Co. Sol., Media, Pa., for County of Delaware.
   FINDINGS OF FACT, DISCUSSION, AND CONCLUSIONS OF LAW

HUYETT, District Judge.

Plaintiffs, five in number, have filed this action against the Chester County and Delaware County Solid Waste Authorities, the respective executive directors, Chester County and Delaware County seeking in-junctive as well as monetary relief from the alleged infringements committed by defendants. Each plaintiff is a commercial trash hauler engaged in the collection and transportation of commercial trash from the City of Philadelphia.

Defendant Chester County Solid Waste Authority (“Chester Authority”) owns and operates the Lanchester Landfill while the Delaware County Incinerator (Solid Waste) Authority (“Delaware Authority”) owns and operates the Colebrookdale Landfill located in Berks County. In a memorandum dated March 29, 1985, J. Erik Schaeffer, the executive director of the Chester Authority and a defendant in this action, advised all haulers that there was a possibility that due to the high volume of trash being dumped, out-of-county trash would not be accepted at the Lanchester Landfill after June 30, 1984; the only exception noted was the long-term contracts for LARA (Lancaster County) and the City of Philadelphia. By notice dated April 17, 1985, Victor Petaccio, executive director of the Colebrookdale Landfill, advised the public that the Colebrookdale Landfill would be closed as of May 31,1985 and the landfill would be reserved for the needs of Delaware County.

Plaintiffs contend that the closure of these landfills violated their rights to equal protection and due process as guaranteed by the fourteenth amendment. Plaintiffs further contend that defendants’ actions violate sections one and two of the Sherman Act, 15 U.S.C. §§ 1 and 2 and section two of the Clayton Act, 15 U.S.C. § 13.

Plaintiffs filed this action on June 4, 1985. On that date, counsel for plaintiffs, Mark Lipowicz, appeared before me seeking a temporary restraining order. At the time, the Colebrookdale landfill had closed but there were approximately four weeks remaining before the Lanchester Landfill was scheduled to close. I denied plaintiffs’ request for a TRO and ordered counsel to meet with the defendants to try to reach an agreement.

On June 26, 1985, after evidently making little effort to resolve this matter amicably, plaintiffs renewed their request for a preliminary injunction hearing. In my absence, Judge Poliak as emergency judge met with the parties on June 27. An agreement was reached that the status quo would be maintained at least through July 2. I held a hearing in Reading on July 5, 1985 at which all parties had an opportunity to present evidence. In addition to plaintiffs’ motion for a preliminary injunction, I also considered defendants’ motions to dismiss or in the alternative for summary judgment. Plaintiffs had also filed a Rule 56(f) motion seeking additional time for discovery before I ruled on defendants’ summary judgment motions.

For the reasons outlined below and in my bench opinion of July 5, 1985, and as set forth in my order of July 8, 1985, I conclude that plaintiffs’ motion for a preliminary injunction must be denied and defendants’ motion for summary judgment granted in part.

FINDINGS OF FACT

1. I incorporate in my findings of fact all those facts to which the parties have stipulated. These include the stipulation of facts relating to defendants Erik Schaeffer and Chester County Solid Waste Authority with the exception of paragraphs 12,16, 21, and 33 and the stipulation of facts relating to defendants Delaware County Incinerator (Solid Waste) Authority and Victor Petaccio with the exception of paragraphs 6, 11, 13, and 20.

2. James Lawrence Boling testified on behalf of the Chester County defendants in a candid and forthright manner and I therefore found him to be a credible witness.

3. Mr. Boling presently serves as the Chairman of the Chester Authority.

4. Chester County formed the Chester Authority on August 20, 1984 pursuant to its obligation under the Solid Waste Management Act, 35 P.S. § 6018.101 (“Solid Waste Act”) to provide for the collection, transportation, processing, and disposal of municipal waste.

5. Chester County has guaranteed any default on Chester Authority’s bonded debt by the full faith and credit of the County.

6. The Chester Authority was empowered to operate a landfill and to finance its operation.

7. At the time the Chester Authority purchased the Lanchester Landfill, approximately one-half of the trash dumped at the landfill was from outside Chester County.

8. At the time Chester Authority purchased the Lanchester Landfill, the landfill had an expected life expectancy of 15 years.

9. At the time Chester County purchased the Lanchester Landfill, daily tonnage of trash was 1,700 tons. The plan at that time was that disposal would never exceed 2,200 tons per day.

10. Starting in October and November the daily tonnage the landfill accepted started to rise. The rise continued after the Kinsley Landfill in New Jersey closed to Philadelphia trash and peaked at about 4,000 tons per day in March.

11. As of July 5, 1985, Lanchester Landfill is receiving approximately 3,300 to 3,400 tons per day.

12. As the tonnage started to increase through the late fall and early spring, the Chester Authority became increasingly concerned about the volume and the landfill’s ability to handle it.

13. Lanchester Landfill employees were unable to keep up with the volume of trash; they could not spread and compact the trash at the same rate as the trash was being disposed. Maintenance and environmental hazards increased for this reason.

14. Lanchester Landfill has established minimum tonnages as a tool to control the expected per day tonnage.

15. The Chester County Authority acted independently of Chester County when it decided to close the Lanchester landfill to out-of-county trash,

16. John Erik Schaeffer testified at the hearing on July 5, 1985. Because Mr. Schaeffer testified in an open and straightforward manner, I found him to be a credible witness.

17. When the Lanchester landfill started accepting more than the optimal 1,700-2,200 tons of trash per day, Mr. Schaeffer recommended to the authority that they exclude out-of-county trash.

18. At the time he recommended the closure of Lanchester, Mr. Schaeffer was unaware of plans to close the Colebrook-dale Landfill.

19. At the rate the landfill was being used in late 1984 and early 1985, the Lan-chester would be full in seven years.

20. After the landfill is closed, the Chester Authority will continue to be responsible for its care for 15 years.

21. Lanchester Landfill has continued to accept certain high-priced residuals such as asbestos from outside of Chester County-

22. Mr. Victor Petaccio testified on behalf of himself and the Delaware Authority. He is the general manager of the Cole-brookdale Landfill.

23. Mr. Petaccio testified in an honest and candid manner and I found him to be a credible witness.

24. The “comfort zone” or the amount of trash the Colebrookdale Landfill can handle on a regular daily basis is approximately 900 tons.

25. Prior to the June 1, 1985 closure of Colebrookdale landfill to out-of-county trash, the landfill was receiving between 26,000 tons and 27,000 tons per month or about 1,400 tons daily.

26. Delaware County is responsible for the disposal of trash from 45 municipalities.

27. The county owns two transfer stations through which all trash collected within the county must be funnelled.

28. Presently, the Colebrookdale Landfill receives Delaware County trash only from the Chester Township transfer station.

29. Trash currently collected at the Marple Township transfer station will be deposited at the Colebrookdale landfill starting in February 1987 when the contract providing for dumping at the Potts-town landfill expires.

30. Approximately one half of the Cole-brookdale landfill is an old, unlimed depository of old trash. The landfill is in the process of excavating this old trash to rebury it after properly processing it.

31. If the landfill is forced to accept an increased volume of trash such as that caused by the dumping of out-of-county trash, it will have to divert manpower and resources from the excavation project which will serve to heighten the environmental risks posed by the unlimed portion of the dump.

32. At the time the Delaware Authority purchased the Colebrookdale landfill, the life expectancy of the landfill was three and one-half years.

33. The notice defendant Victor Petac-cio circulated on behalf of the Delaware Authority advising the public of the closure of Colebrookdale Landfill stated that “[i]t is essential to preserve already limited capacity for the Delaware County waste stream and control costs of operation which have recently increased sharply because of new and higher expenses incurred to manage the landfill.”

DISCUSSION

The granting or denial of a request for preliminary injunction is ordinarily discretionary with the trial judge. This discretion is necessary because of the “infinite variety of situations which may confront” the court. A.L.K. Corp. v. Columbia Pictures Indus., Inc., 440 F.2d 761, 763 (3d Cir.1971). A preliminary injunction is an extraordinary and drastic remedy. The power to issue an injunction must be used sparingly, and relief should not be granted except in rare instances in which the law, the facts, and equities are clearly in the moving party’s favor. See Wright & Miller, Federal Practice & Procedure, § 1848, at 428-29 (1973).

To prevail on a motion for a preliminary injunction, the moving party must demonstrate: (1) that he is likely to prevail on the merits of the controversy, and (2) that he will be irreparably harmed pendente lite unless the motion is granted. In addition, the court should take into account, when relevant, (1) the possibility of harm to other interested parties from the grant or denial of the injunction, and (2) the public interest. Essentially, the court must balance the existing interests. Oburn v. Shapp, 521 F.2d 142, 147-8 (3d Cir.1975).

Summary judgment may only be granted when it has been established that there is no genuine issue of any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Small v. Seldows Stationery, 617 F.2d 992 (3d Cir.1980). The court does not decide issues of fact, but merely determines if there is an issue of fact to be tried. Ettinger v. Johnson, 556 F.2d 692 (3d Cir. 1977). The facts must be viewed in the light most favorable to the non-moving party and any reasonable doubt as to the existence of a genuine issue of fact is to be resolved against the moving parties. Continental Ins. Co. v. Bodie, 682 F.2d 436 (3d Cir.1982).

Rule 56(f) of the Federal Rules of Civil Procedure provides that:

Should it appear from the affidavits of a party opposing the motion that he cannot
for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

Pursuant to this rule, the correct procedure for a party opposing a motion for summary judgment who seeks discovery before a ruling on the motion is issued is for that person to file an affidavit setting forth the reason why such discovery is needed and in particular, what facts material to his position are unavailable to him without that discovery. In this case, plaintiffs failed to file the requisite affidavits but I will treat their motion and the comments made at the hearing on July 5,1985 as the equivalent of a Rule 56(f) affidavit.

It is within the trial court’s sound discretion to determine whether the reasons the party presents are sufficient to warrant the continuance of the motion. See Mid-South Grizzlies v. National Football League, 720 F.2d 772 (3d Cir.1983). Although it has been repeatedly held that a continuance of a motion for summary judgment pursuant to Rule 56(f) should be granted almost as a matter of course, important exceptions to this rule have been recognized. In Mid-South Grizzlies, 720 F.2d at 780, the Third Circuit, holding that the summary judgment motion was ripe for decision without additional discovery, noted that the plaintiffs’ Rule 56(f) motion was based on pure speculation and raised merely colorable claims that actual or potential competition could be shown. Similarly, the court in United States v. Donlon, 355 F.Supp. 220 (E.D.Del.), aff'd, 487 F.2d 1395 (3d Cir.1973), held that defendant Dolon’s bare assertion that there were facts which would establish his position which were in the exclusive control of the government did not bring him within the purview of Rule 56(f). “The court cannot deny the government’s motion for summary judgment on Dolon’s sheer conjecture.” Therefore, the court must determine whether the party seeking the extension is able to present adequate need for it or whether the party is merely speculating about what might be uncovered through discovery.

Equal Protection

Plaintiffs contend that defendants’ actions in closing the Lanchester and Cole-brookdale Landfills to out-of-county trash violate the equal protection clause of the fourteenth amendment. Plaintiffs claim that the classification of trash by geographic origin is unreasonable and arbitrary and therefore discriminatory and unconstitutional.

Because there is no suspect classification involved and plaintiffs do not have a fundamental right to engage in their businesses, defendants'must merely show that there is a rational relationship between the classification and a legitimate state interest. Chester Authority produced the testimony of Mr. Boling and Mr. Schaeffer who both testified that the authority decided to close the Lanchester Landfill to out-of-county trash to ensure that the landfill was operated safely given its current capacity and that the landfill would not be exhausted prematurely. Similarly, Delaware Authority produced the testimony of Mr. Petaccio, Executive Director of the Colebrookdale Landfill, who testified that the closure was necessitated by the increased environmental hazard caused by the excess dumping and the increased rate at which the landfill was being filled. Plaintiffs were unable to produce any evidence to refute the testimony of these witnesses or to elicit any different facts upon cross-examination.

I am persuaded for purposes of plaintiffs’ preliminary motion that defendants’ position that closure of the respective landfills to out-of-county trash is rationally related to preserving the landfills for county residents and ensuring that a safe level of operation is maintained is correct. Both counties and their respective authorities are under a statutory obligation to provide for the disposition of all solid waste generated within the county, and as Frank Fair, Chief Operating Officer for the Department of Environmental Resources, Region III would have testified, the operator of the landfill is believed to be in the best position to judge the proper rate of acceptance of waste. Moreover, the cases upon which plaintiffs rely, Lutz v. Armour, 395 Pa. 576, 151 A.2d 108 (1959) and Municipality of Monroeville v. Chambers Dev., 491 A.2d 307 (Pa.Commwlth.1985) must be distinguished on the fact that the municipalities in these cases were there excluding all out-of-county trash from being dumped anywhere in the municipality or were regulating the operation and use of privately owned landfills. Here, the authorities own the landfills and are simply regulating the use of their own facilities.

I will, however, decline to enter judgment at this time in favor of the defendants as to plaintiffs’ equal protection claims in order to allow plaintiffs’ additional time to conduct discovery into the basis for the decisions to close the landfills. At the hearing, testimony was adduced to the effect that at least the Lanchester Landfill is still accepting certain high priced trash items from outside the county including asbestos. Although plaintiffs have not convinced me that the Chester Authorities’ decision to continue to accept such items while discontinuing receipt of other trash is not rationally related to its interest in preserving the landfill for the county residents for purposes of their preliminary injunction motion, I believe that plaintiffs are entitled to conduct discovery on this issue. When discovery is complete, defendants should renew their motions for summary judgment.

Due Process

Plaintiffs contend that defendants’ actions in closing the two landfills to out-of-county trash violate their due process rights. Plaintiffs argue that defendants in purportedly exercising their police powers and closing the two landfills violated the public policy of the Commonwealth of Pennsylvania and therefore the due process rights of the plaintiffs. In support of this position, plaintiffs contend that the Solid Waste Management Act, 35 P.S. § 6018.101 et seq. requires area-wide planning and that by closing the landfills to out-of-county trash, defendants have violated the policy.

The Fourteenth Amendment to the United States Constitution states in pertinent part: “nor shall any State deprive any person of life, liberty or property, without due process of of law.” Therefore, to constitute a due process violation, defendants’ actions must have implicated plaintiffs’ interests in life, liberty or property. Plaintiffs have failed to identify of which interest they are allegedly being deprived, but it is clear that neither plaintiffs’ life or liberty interests have been implicated. Therefore the question is whether plaintiffs have a property interest in continuing to haul trash from outside Chester County to Lanchester Landfill to trash from outside Delaware County to the Colebrookdale landfill. I conclude that they do not.

Plaintiffs started to dispose of trash they haul at the two landfills in question in the latter quarter of 1984 after the Kinsley landfill in Deptford, New Jersey was closed to Philadelphia trash. No long-term contracts were ever signed between plaintiffs and the defendant solid waste authorities; rather, plaintiffs have operated with defendants on the basis of short-term agreements which defendants chose not to renew at the time they expired. Furthermore, there is no statutory provision which guarantees plaintiffs the right to continue to dump out-of-county trash at these two landfills.

To have a property interest protectible by the due process clause, a party must have a legitimate claim of entitlement to the benefit which is more than a desire for it or a unilateral expectation of it. Board of Regents v. Roth, 408 U.S. 564, 576-78, 92 S.Ct. 2701, 2708-10, 33 L.Ed.2d 548 (1972). Property interests “... are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law— rules or understandings that secure certain benefits and that support claims of entitlement to those benefits.” Id. Plaintiffs had nothing more than a unilateral expectation that they would be able to continue to dump at the Lanchester and Colebrookdale landfills; therefore, there was no property-interest giving rise to a due process claim. There are no genuine issues of material fact, and I do not believe that discovery will enable plaintiffs to produce any additional facts to support their position. Accordingly, judgment may be entered in favor of defendants and against plaintiffs as to plaintiffs’ due process claim.

Antitrust

Plaintiffs also contend that defendants’ actions in closing the landfills are anticom-petitive and constitute violations of sections one and two of the Sherman Act and section two of the Clayton Act. Relying on a line of cases in which the state courts have held that municipal authorities are independent entities are not agents of the municipalities that create them, plaintiffs argue that there has been a conspiracy or combination between each authority and its respective county. For instance, plaintiffs claim that within one month of the purchase of the Colebrookdale landfill, Delaware Authority entered into an agreement with Delaware County to close the landfill to out-of-county trash. (Memorandum, at 20-21). Plaintiffs further argue that there is evidence that there was a conscious parallelism between the actions of the two authorities. These combinations, plaintiffs contend, constitute restraints of trade.

Because I conclude both that defendants are immune from antitrust liability pursuant to the doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943) and that even if they were not, their actions would not be violative of the federal antitrust laws, I will deny' plaintiffs’ request for a preliminary injunction based on their antitrust claims. Moreover, I do not believe that there are any facts essential to plaintiffs’ position which warrant additional discovery for purposes of Fed.R.Civ.P. 56(f) and warrant my delaying ruling on defendants’ motions for summary judgment as to plaintiffs’ antitrust claims. Accordingly, judgment shall be entered in favor of all defendants and against plaintiffs as to the antitrust claims.

In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), the Court established an exemption from antitrust for state action. Relying on the principles of federalism and state sovereignty, the Court ruled that the Sherman Act was intended only to prohibit private restraints on trade, not anticompetitive conduct of a state acting through its legislature. Id. at 350-1, 63 S.Ct. at 313-14; Town of Hallie v. City of Eau Claire, — U.S.-, 105 S.Ct. 1713,1716, 85 L.Ed.2d 24 (1985). Municipalities may also be entitled to antitrust immunity if their actions are authorized by state policy on the theory that the municipality becomes “an instrumentality of the State for the convenient administration of government within [its] limits.” City of Lafayette v. Louisiana Power and Light Co., 435 U.S. 389, 413, 98 S.Ct. 1123, 1136-37, 55 L.Ed.2d 364 (1978).

In the most recent case in the development of the Parker v. Brown doctrine, Town of Hallie v. Eau Claire, — U.S. -, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985), the Court held that before a municipality will be entitled to the protection of the state action immunity, it must show that it was “engaging in the challenged activity pursuant to a clearly expressed state policy.” Id. 105 S.Ct. at 1717. The specific question the Hallie Court addressed for the first time was how clearly the state policy must be articulated before a municipality can show that its anticompetitive activity constitutes state action. The Court concluded that once a municipality is authorized to act to perform a particular governmental function, it is immune from antitrust liability if the resulting anticompeti-tive effects would logically flow from this authority.

In Hallie, the Court ruled that a Wisconsin municipality acting pursuant to a Wisconsin statute authorizing cities to construct and maintain sewage systems, was exempt from liability under the Sherman Act. The City of Eau Claire had built a sewage treatment facility within the Eau Claire Service Area that included the plaintiff towns; the facility was the only one available to the plaintiffs. The City of Eau Claire refused to supply sewage treatment services to the Towns but agreed to supply sewage treatment to individual landowners in these towns if a majority of the landowners in an area voted to have their homes annexed by the City and voted to use the City’s sewage collection and transportation services. Plaintiffs contended that they were potential competitors in the collection and transportation of sewage and that the city’s actions in using its monopoly over sewage treatment to gain a monopoly over the provision of sewage collection and transportation was a violation of federal antitrust laws.

Noting that the state statute authorized the city to provide sewage systems and to determine the areas to be served, the Court concluded that the anticompetitive effects of which plaintiffs complained flowed logically from the state grant of authority to regulate the use of the sewage system. Therefore, the City of Eau Claire was entitled to state action exemption from antitrust liability.

Similarly, the Chester and Delaware Authorities have acted pursuant to the Pennsylvania Solid Waste Management Act, 35 P.S. § 6018.101 et seq. in purchasing and operating the respective landfills. Determining that improper and inadequate solid waste practices create public health hazards, environmental pollution and economic loss and cause irreparable harm to the public health, safety and welfare, the Legislature passed this act to establish a comprehensive plan for the management of solid waste within the Commonwealth. The Act provides that each municipality, which is defined to include counties and authorities, § 6018.103, is responsible for the collection, transportation, processing and disposal of municipal waste which is generated or present within its boundaries. § 6018.-202(a). To this end, each municipality must implement an approved plan for the handling, including disposal, of wastes. Moreover, each municipality may adopt ordinances, regulations, and standards for the storage and collection of wastes and may make waste disposal a public function. To satisfy these statutorily imposed obligations, both Chester and Delaware Counties decided to create authorities pursuant to the Municipality Authorities Act of 1945, 53 P.S. § 306 et seq., to administer the solid waste plans. Each authority is empowered to acquire and operate solid waste disposal facilities for the respective county. Pursuant to this power, Chester Authority purchased the Lanchester Landfill and the Delaware Authority purchased the Colebrook-dale Landfill. The authorities then, acting independently of one another and of the respective county administrations, decided that circumstances necessitated the closing of the landfills to out-of-county trash. The question presented is whether the closing of the landfills by the authorities and the resulting anticompetitive effect, if any, was a foreseeable, logical consequence of the power vested in the authorities by the State legislature in the Solid Waste Management Act. I conclude that it is and that therefore defendants are entitled to immunity from antitrust violation.

The Solid Waste Management Act reflects a clearly articulated state policy requiring the organized collection and disposal of solid wastes generated within a municipality. The Legislature determined that the municipality, including the county and the authority was in the best position to effectuate the Commonwealth’s goals. Each defendant authority has determined that in order to best serve the county for which it was created it must close its landfill to out-of-county trash. Closure of the landfills is a logical consequence of the state created power and obligation of a municipality to provide for the disposal of its own waste.

Plaintiffs contend that defendants are not immune from antitrust violations because the closure of the landfills to out-of-county trash contravenes the state policy in regionalization and area-wide planning. Plaintiffs’ memorandum, at 18. Plaintiffs argue that the Act “emphasizes cooperative and comprehensive planning” on an “area-wide” or regional basis. In support of this proposition plaintiffs point to sections 102(1) and 104(3) of the Act and a recent decision by the Commonwealth Court in Municipality of Monroeville v. Chambers Development Corp., 491 A.2d 307 (Pa.Comwlth.1985). Although these provisions do speak in terms of area-wide planning, there is no definition provided as to what shall constitute an area. Section 201(b), 35 P.S. § 6018.201(b) sheds the only light on this issue when it says “[e]ach municipality ... shall submit to the department an officially adopted plan for a municipal waste management system or systems serving the areas within its jurisdiction.” From this provision, one can conclude that the legislature had in mind municipal or county-wide planning. Chester and Delaware Counties have engaged in exactly this: county-wide planning. Moreover, the entire thrust of the Solid Waste Management Act is towards placing an obligation on the municipality to provide for the collection, processing and disposal of trash and taking whatever steps are necessary to fulfill this obligation.

Even if defendants were not entitled to immunity from antitrust liability, plaintiffs’ claims fail. Plaintiffs’ first claim is pursuant to section one of the Sherman Act which prohibits any contract, comination or conspiracy in restraint of trade. There has been simply no evidence of any contract, combination or conspiracy, and a refusal to deal without collusive action does not give rise to a violation of the Sherman Act. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 104 S.Ct. 1464, 1469, 79 L.Ed.2d 775 (1984). Noting that authorities are independent entities and not the agents of the municipalities which create them, see In Re Municipal Authority of Upper St. Clair, 184 A.2d 695, 408 Pa. 464 (1962), plaintiffs contend that there has been concerted activity between Chester Authority and Chester County and between Delaware Authority and Delaware County. Plaintiffs presented absolutely no evidence to support this allegation at the preliminary injunction hearing. Moreover, I heard the testimony of Mr. Boling, President of the Chester Authority who testified on cross-examination that the decision to close the Lanches-ter landfill to out-of-eounty trash was made by the Authority alone without consultation with the county. Plaintiffs were unable to refute this testimony. They argue, however, that they should be given an opportunity to conduct extensive discovery to determine whether indeed there was some concerted activity. Discovery, however, is not to be a fishing expedition. Furthermore, when plaintiffs’ counsel filed this complaint, they were under an obligation to certify that a claim is well grounded in fact. Fed.R.Civ.P. 11. Plaintiffs failed to provide me with even a shred of evidence to support a claim that there was any concerted activity between the counties and the respective authorities such that would warrant allowing them time to develop factual support for this theory through discovery. Pure speculation does not warrant a continuance pursuant to Fed.R.Civ.P. 56(f).

Similarly, I reject plaintiffs’ contention that there is an element of consciously parallel behavior between the pairs of defendants. Plaintiffs are merely acting on suspicions for which they have absolutely no factual basis. Evidently, plaintiffs believe that it is incredible that two solid waste authorities would act to close their respective landfills to out-of-county trash within two months of each other. I find, however, that this behavior is not at all unusual given that these landfills both started taking an increased volume in late 1984 as a stop-gap measure in response to the closure of the Kinsley Landfill in Dept-ford, New Jersey to Philadelphia trash. Both landfills experienced rapidly increasing volumes of trash which they were not equipped to handle on a continual basis. The natural response was to find a means to reduce the daily volume deposited while still serving the interests of the respective counties. Plaintiffs have presented no evidence to the contrary.

Furthermore, as defendant Chester County has argued, conscious parallelism without more does not give rise to an antitrust violation. Plaintiffs must establish that (1) the consciously parallel behavior was in contradiction of defendants’ own economic interest, and that (2) the defendants had a motive to enter into an agreement. Schoenkopf v. Brown & Williamson Tobacco Corp., 637 F.2d 205, 208 (3d Cir.1980). Plaintiffs have failed to establish either of these elements.

Moreover, there has been no restraint of trade shown. In determining whether there is a restraint of trade, one must look to the market impact of the challenged activity; plaintiffs have not clearly identified what market they believe has been adversely affected by defendants’ actions in closing the respective landfills to out-of-county trash. Plaintiffs simply speak in terms of the elimination of inter-county competition for the use of the two landfills. Memorandum at 21. All haulers of out-of-county trash, however, are subject to the same restrictions, so there has been no restriction of competition as between these haulers. Moreover, plaintiffs are still free to compete for the hauling of in-county trash. The counties themselves are not in competition with one another. The only other market possibly affected by defendants’ actions is the market for the disposal of waste. By closing the two landfills, defendants have withdrawn a competitor from the market; they have not restricted competition among the landfills because the other landfills are free to accept or refuse additional waste and other persons or entities are still free to open new landfills.

Similarly, a mere refusal to deal does not give rise to a violation of the Clayton Act. Anaya v. Las Cruces Sun News, 455 F.2d 670, 672 (10th Cir. 1972); Harlem River Consumers Co-op., Inc. v. Associated Grocers of Harlem, Inc., 371 F.Supp. 701, aff'd. 493 F.2d 1352 (2d Cir. 1974). Section two of the Clayton Act, 15 U.S.C. § 13, expressly recognizes a party’s right to choose its own customers on the basis of business necessity. Defendants here have clearly established that the needs of the respective counties and their citizens necessitated the closure of the landfills to out-of-county trash.

Another element of an antitrust violation is that the alleged violation acts with an anticompetitive purpose or the specific intent to acquire a monopoly, to fix prices or to establish market dominance and drive out existing competitors. Usually, the question of a defendant’s motivation is a factual question which should not be taken from the jury. California Steel and Tube v. Kaiser Steel Corp., 650 F.2d 1001, 1004 (9th Cir. 1981). In this case, I conclude that not only have plaintiffs failed to establish a probability of success as to the issue of defendants’ anticompetitive purpose for purposes of a preliminary injunction but also that plaintiffs have provided absolutely no evidence that the purpose of the Chester and Delaware Authorities in closing the Lanchester and Colebrookdale landfills, respectively, was anything other than what they said it was, to fulfill its obligation under state laws to provide for the waste generated within Chester County. To escape summary judgment, plaintiffs must present sufficient evidence to establish that there is a genuine issue of material fact. While I am aware that it is difficult if not impossible for plaintiffs in cases of this kind to point to a “smoking gun,” plaintiffs must still convince me “that it is reasonable to infer the existence of the gun from the facts shown.” Aladdin Oil Co. v. Texaco, Inc., 603 F.2d 1107, 1117 (5th Cir. 1979). Plaintiffs have not so convinced me, and I am convinced that additional discovery would not assist plaintiffs in proving their theory here. I heard extensive testimony from Mr. Boling, Mr. Schaeffer, and Mr. Petaccio that the two landfills were closed to out-of-county trash to preserve the life expectancy of the landfills for the counties and to protect the surrounding communities from the environmental hazards posed by the excess tonnage being deposited every day by plaintiffs and other commercial trash haulers.

Finally, plaintiffs’ claims for treble damages, interest, costs, and attorneys’ fees are barred by the Local Government Antitrust Act of 1984, 15 U.S.C. §§ 34-36 (1984). Section 35(a) of the Act provides that “[n]o damages, interest on damages, costs or attorney’s fees may be recovered under section 15, 15a, or 15c of this title from any local government, or official or employee thereof acting in an official capacity.” Local government is defined to include any county or other special function government unit established by state law. § 34. Therefore, this Act clearly precludes relief against any of the defendants in the form of monetary damages.

Irreparable Harm

Plaintiffs contend that they will sustain irreparable harm if defendants are permitted to close the Lanchester and Delaware Landfills to out-of-county trash. Defendants on the other hand contend that there are other landfills available which are ready and willing to accept trash from new haulers or additional trash from present dumpers and that therefore, plaintiffs will not be irreparably harmed.

The evidence presented at the hearing on July 5th was conflicting as to the actual availability of other landfills. Defendants presented testimony of Mr. Schaeffer and Mr. Pettacio to the effect that there are at least six other locations at which plaintiffs could dump the trash they collect: Keystone; GROWS; Knickerbocker; Western Berks; Berks, and the Harrisburg incinerator. Plaintiffs on the other hand in their proffered testimony, stated that no other existing landfills would permit them to come in as new customers and those at which they have existing accounts would not permit increased dumping. Plaintiffs further stated that they do not presently have the equipment to haul the trash long-distance, i.e., to Scranton or Baltimore.

As I noted at the July 5th hearing, no one can doubt the seriousness of the predicament plaintiffs, defendants, and the City of Philadelphia face and I am certainly sensitive to plaintiffs’ position. Nevertheless, I do not believe that the relief plaintiffs seek here is appropriate. As I have stated, plaintiffs’ due process and antitrust claims fail and the likelihood of success on the equal protection claim is minimal. Moreover, I am not convinced that plaintiffs will be irreparably harmed if I do not issue a preliminary injunction. Plaintiffs’ major concern seems to be the increased costs that they will incur if they are forced to haul their trash a greater distance. Monetary damages do not establish irreparable injury for purposes of a preliminary injunction. Moreover, I note that under the Solid Waste Management Act, 35 P.S. § 6018.202 the City of Philadelphia is under an obligation to provide for the disposition of trash generated within its boundaries.

For all these reasons, I conclude that plaintiffs are not entitled to injunctive relief and that judgment should be entered in favor of defendants and against plaintiffs as to plaintiffs’ due process and antitrust claims.

Conclusions of Law

1. Plaintiffs have not demonstrated a likelihood of success on the merits of its equal protection claim.

2. Defendants are entitled to judgment as a matter of law as to plaintiffs’ due process and antitrust claims.

3. Plaintiffs have not shown that they will suffer irreparable harm pendente lite if I do grant a preliminary injunction.

4. Plaintiffs are not entitled to a preliminary injunction.

      . The following constitute my findings of fact pursuant to Fed.R.Civ.P. 52(a).

      . I have considered Delaware County defendants' motion for abstention pursuant to the doctrine of Railroad Comm’n. of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941) and have concluded that abstention is not required in this instance.