Opinion ID: 774507
Heading Depth: 4
Heading Rank: 2

Heading: The Local Processing Cases

Text: 72 A commonly cited example of the Court's local processing cases is Dean Milk Co. v. City of Madison, 340 U.S. 349 (1951). There, the Court struck down a city of Madison, Wisconsin ordinance that required all milk sold in the city to be pasteurized within five miles of the central portion of the city. The ordinance applied to all businesses, in-state and out-of-state. The practical effect of the ordinance, however, was to erect[] an economic barrier protecting a major local industry against competition from without the State. 340 U.S. at 354 (emphasis added). The fact that out-of-state businesses could build pasteurizing facilities within the five-mile radius did not make it any less discriminatory. Requiring local investment benefitted the city at the expense of other states and municipalities. In South-Central Timber Dev. v. Wunnicke, 467 U.S. 82 (1984), a four-justice plurality confirmed that export restraints undertaken to promot[e] employment or investment within the state fell within the rule of virtual per se invalidity. Id. at 100-01. There, the Court struck down a state regulation requiring in-state processing of timber. See id.; see also Hughes v. Oklahoma, 441 U.S. 322, 338 (1979) (striking statute that restricted the number of minnows that could be transported out-of-state); Minnesota v. Barber, 136 U.S. 313, 323 (1890). 73 Other decisions in the local processing line of cases evidence the same intent to prevent state or local governments from favoring in-state business or investment at the expense of out-of-state businesses. In Baldwin v. G.A.F. Seelig, 294 U.S. 511 (1935), another milk case, the Court struck down an ordinance which erected barriers to out-of-state competition of the local milk industry by instituting a system of minimum prices. Id. at 519. In Foster Fountain Packing Co. v. Haydel, 278 U.S. 1 (1928), the Court struck down a Louisiana statute which forbade the export of shrimp unless the heads and hulls had first been removed within the state. Id. at 12-14; see Johnson v. Haydel, 278 U.S. 16 (1928) (striking a similar Louisiana statute regarding thepre-shipment processing of oysters); see also Toomer v. Witsell, 334 U.S. 385, 403-07 (1948) (striking down South Carolina statute that required shrimp fishermen to unload, pack and stamp their catch before shipping it to another state). The Court held these statutes discriminatory because, whether in design or effect, they benefitted the local seafood processing industry over out-of-state competition. 74 United Haulers asks us to focus on the Court's broadly stated prohibition against the hoarding of local resources that otherwise would enter the stream of interstate commerce. A blanket prohibition against the hoarding of articles of commerce would appear to preclude the Counties' flow control scheme. However, we must interpret the Court's holdings in context, not in a vacuum. The common thread in the Court's dormant Commerce Clause jurisprudence, highlighted in the local processing cases discussed above, is that a local law discriminates against interstate commerce when it hoards local resources in a manner that favors local business, industry or investment over out-of-state competition. See, e.g., College Sav. Bank v. Fl. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 685 (1999) (describing the evil addressed by the Commerce Clause as the prospect that States will use custom duties, exclusionary trade regulations, and other exercises of governmental power (as opposed to the expenditure of state resources) to favor their own citizens). The majority in Carbone recognized this additional requirement while describing the evils of local processing laws: Put another way, the offending local laws hoard a local resource -- be it meat, shrimp,... milk [or garbage] -- for the benefit of local businesses that treat it. 511 U.S. at 392 (emphasis added). 75 There is sound reason for the Court's consistent, although often unstated, recognition of the distinction between public and private ownership of favored facilities: 76 Reasons other than economic protectionism are... more likely to explain the design and effect of an ordinance that favors a public facility.... An ordinance that favors a municipal facility, in any event, is one that favors the public sector, and if we continue to recognize that the States occupy a special and specific position in our constitutional system and that the scope of Congress' authority under the Commerce Clause must reflect that position, then surely this Court's dormant Commerce Clause jurisprudence must itself see that favoring state-sponsored facilities differs from discriminating among private economic actors, and is much less likely to be protectionist. 77 Id. at 421 (Souter, J., dissenting) (internal quotation marks and citation omitted). Not only are such regulations less likely to be protectionist, id., they are less likely to give rise to retaliation and jealousy from neighboring states. Moreover, ordinances that favor a public facility to the detriment of all private actors are equipped with a built-in check: municipal legislators are accountable to citizens, many of whose interests are likely to be aligned to some degree with the interests of private business, either as owners, employees or investors. Where the local legislation benefits local industry to the detriment of its competition, as in all of the local processing cases, this check is inadequate. Here it is not. 78 The principal burden of any economic inefficiency imposed by the Counties' ordinances falls on the residents of the Counties. They must pay over twice as much to dispose of their solid waste as they paid prior to the adoption of theordinances. There is no evidence that any out-of-state business or individual is paying more for waste collection or disposal as a result of the ordinances (as was the case in Carbone). The plaintiffs here are local waste collection companies. While it is true that private waste processors both in-state and out-of-state are prevented by the ordinances from competing to perform and receive payment for the operations performed at the mandatory transfer station, that disadvantage does not fall more heavily on out-of-state concerns than on local ones. The out-of-state processors furthermore have not complained, and there is no indication the deprivation represents a meaningful economic loss. 79 The Commerce Clause was not passed to save the citizens of Clarkstown from themselves. It should not be wielded to prevent them from attacking their local garbage problems with an ordinance that does not discriminate between local and out of town participants in the private market for trash disposal services and that is not protectionist in its purpose or effect. 80 Id. at 430 (Souter, J., dissenting). To the extent that a state or local government risks causing inconsistent local laws or inciting retaliation among the states to the detriment of the national market, the Pike test is a suitable vehicle for meaningful judicial review. 397 U.S. at 142; see Healy v. The Beer Inst., 491 U.S. 324, 336-37 (1989) (holding that, under the Pike test, the practical effect of the statute must be evaluated not only by considering the consequences of the statute itself, but also by considering how the challenged statute may interact with the legitimate regulatory regimes of other States). 81 United Haulers also relies on the fact that no case has yet expressly relied on the distinction between public and private ownership, see U & I Sanitation v. City of Columbus, 205 F.3d 1063, 1067-68 (8th Cir. 2000); Huish Detergents, 214 F.3d at 715-16 (striking down regulation that awarded private local waste collection company franchise over County collection duties); Waste Mgmt. v. Metro. Gov't, 130 F.3d 731, 733-36 (6th Cir. 1997); Harvey & Harvey, 68 F.3d at 807-09 (remanding for consideration of effects of local action awarding exclusive waste disposal contract to private local business), and that a number of appellate and district courts have implicitly rejected the distinction without discussion. See Waste Sys. Corp. v. County of Martin, 985 F.2d 1381, 1385-89 (8th Cir. 1993) (striking down ordinance that required all waste generated within locality to be delivered to public waste facility); Coastal Carting Ltd. v. Broward County, 75 F.Supp.2d 1350, 1352 & n.1 (S.D. Fla. 1999); Randy's Sanitation v. Wright County, 65 F.Supp.2d 1017 (D. Minn. 1999); Zenith/Kremer Waste Sys. v. W. Lake Superior Sanitary Dist., 1996 WL 612465, at -3, 10 n.13 (D. Minn. July 2, 1996); Waste Recycling v. Southeast Ala. Solid Waste Disposal Auth., 814 F.Supp. 1566, 1570, 1577-83 (M.D. Ala. 1993) (striking down flow control ordinances which required all waste to be delivered to a Public Authority landfill), aff'd, 29 F.3d 641 (11th Cir. 1994) (unpublished table decision). Assuming that these courts were faced with pure public ownership of the favored facility, as we are here, their holdings are not binding on our determination and have little persuasive value given that the courts did not directly address the issue we decide today. 82 Only one case has expressly addressed and rejected the distinction. See Southcentral Pa. Waste Haulers Ass'n, 877 F.Supp. at 943. There, private waste haulers were required by law to deliver all solid waste to a landfill, owned and operatedby the local solid waste authority, a public corporation. Id. at 938. The defendants, like the Counties and the Authority here, argued that Carbone did not apply to an ordinance that favored a publicly owned facility. Id. at 943. The district court, relying primarily on the Supreme Court's statements about hoarding local resources, was not persuaded that the public nature of the Authority facility changes the applicable analysis. Id. (citing Waste Sys. Corp., 985 F.2d at 1387, and Waste Recycling, 814 F.Supp. at 1578). We believe that it does change the analysis and we respectfully disagree with that decision for the reasons already discussed. 83 Moreover, we find ample precedential support for our conclusion in (1) the consistent underlying facts of the local processing line of cases, a line in which the majority squarely placed Carbone, and (2) the opinions of four Supreme Court Justices, all of whom characterized the facility in Carbone as publicly owned, and therefore would have analyzed the challenged ordinance under the more lenient Pike test. In this case, unlike Carbone, there is no confusion or room for debate regarding the ownership of the favored facilities. They are owned by the Authority, a public entity, and not by any local business. 84 To summarize, a flow control ordinance governing the processing of waste is not discriminatory under the Commerce Clause unless it favors local private business interests over out-of-state interests. Flow control regulations like the Oneida-Herkimer ordinances, which negatively impact all private businesses alike, regardless of whether in-state or out-of-state, in favor of a publicly owned facility, are not discriminatory under the dormant Commerce Clause. The district court erred by so holding.