Opinion ID: 2344491
Heading Depth: 1
Heading Rank: 13

Heading: Pike analysis

Text: Absent this discrimination, the zoning amendments `will be upheld unless the burden imposed on [interstate] commerce is clearly excessive in relation to the putative local benefits.' Davis, 553 U.S. at 338-39, 128 S.Ct. 1801 (citing Pike, 397 U.S. at 142, 90 S.Ct. 844). It does not appear that Judge Klinginsmith engaged in this next analytical step, i.e., the Pike balancing test, which is reserved for laws `directed to legitimate local concerns, with effects upon interstate commerce that are only incidental.' United Haulers, 550 U.S. at 346, 127 S.Ct. 1786. The Pike court described its test as follows: Although the criteria for determining the validity of state statutes affecting interstate commerce have been variously stated, the general rule that emerges can be phrased as follows: Where the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. Huron Portland Cement Co. v. Detroit, 362 U.S. 440, 443 [80 S.Ct. 813, 4 L.Ed.2d 852 (1960) ]. If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities. 397 U.S. at 141-42, 90 S.Ct. 844. A number of federal circuit courts of appeal have distilled the Pike test as follows: The court considers (1) the nature of the putative local benefits advanced by the statute; (2) the burden placed on interstate commerce by the statute; and (3) whether the burden is clearly excessive when weighed against these local putative benefits. See Pharmaceutical Care Management Ass'n. v. Rowe, 429 F.3d 294, 312 (1st Cir.2005); Grand River Enterprises Six Nations, Ltd. v. Pryor, 425 F.3d 158, 169 (2d Cir.2005); Star Scientific Inc. v. Beales, 278 F.3d 339, 357 (4th Cir.2002). The Tenth Circuit apparently also retains Pike 's reference to whether the local interests can be promoted as well with a lesser impact on interstate commerce. Blue Circle Cement, 27 F.3d at 1512. In Zimmerman I, we essentially held that the zoning regulation amendments were directed to legitimate local public concerns, e.g., aesthetics. Accordingly, our remaining analysis focuses on weighing the burdens placed on interstate commerce by the Board's decision against the local putative benefits. For additional guidance, we first turn to United Haulers, 550 U.S. 330, 127 S.Ct. 1786. There, a trade association of solid waste management companies and six haulers that operated in two New York counties sued the counties under 42 U.S.C. § 1983 on the basis that the counties' flow control laws violated the Commerce Clause. The laws allegedly not only discriminated against interstate commerce but also placed an incidental burden on interstate commerce that outweighed the ordinances' benefits. After finding no discrimination, the Court determined that the counties' ordinances were properly analyzed under Pike. It first noted: After years of discovery, both the Magistrate Judge and the District Court could not detect any disparate impact on out-of-state as opposed to in-state businesses. The Second Circuit alluded to, but did not endorse, a `rather abstract harm' that may exist because `the Counties' flow control ordinances have removed the waste generated in Oneida and Herkimer Counties from the national marketplace for waste processing services.' 550 U.S. at 346, 127 S.Ct. 1786 (citing United Haulers Ass'n v. Oneida-Herkimer Solid Waste Management, 438 F.3d 150, 160 (2006)). The Court then stated: We find it unnecessary to [proceed to] decide whether the ordinances [actually] impose any incidental burden on interstate commerce because any arguable burden [as expressed by the lower courts] does not exceed the public benefits of the ordinances. (Emphasis added.) 550 U.S. at 346, 127 S.Ct. 1786. The Court then explained its rationale, concluding: For these reasons, any arguable burden the ordinances impose on interstate commerce does not exceed their public benefits. 550 U.S. at 347, 127 S.Ct. 1786. The Court's particular handling of the Pike analysis, by a 4-justice plurality in Part II.D of the opinion, could support the argument of the Board and amicus curiae Protect that no discovery is needed in the instant case on the Commerce Clause issue. In other words, there simply is no arguable burden to exceed the public benefits, and this court could decide the issue as a matter of law. In rejecting this argument, we first observe that unlike the instant case, the Pike analysis was performed in United Haulers at all three court levels after years of discovery. 550 U.S. at 337, 346, 127 S.Ct. 1786. We next observe that instructive caselaw disagrees with the Board and Protect. In Lebanon Farms Disposal, Inc. v. County of Lebanon, 538 F.3d 241 (3d Cir.2008), the parties agreed that United Haulers, which was released while the case was on appeal, controlled the outcome of the appeal. However, they disagreed about the appropriate disposition. The County and the Greater Lebanon Refuse Authority argued that their ordinances passed the Pike balancing test because they were indistinguishable from the ordinances considered in United Haulers. On the other hand, the disposal company argued that applying the Pike balancing test, instead of the strict scrutiny standard required after finding discrimination, yielded the same result as the district court's erroneously applied strict scrutiny review: the ordinances still violated the dormant Commerce Clause. The Third Circuit vacated the district court's grant of partial summary judgment and the resulting permanent injunction and remanded, ordering the court to make necessary findings of fact and conclusions of law and to perform the Pike balancing test.  Considering the strong language of the Supreme Court's holding in United Haulers, which found `it unnecessary to decide whether the ordinances impose any incidental burden on interstate commerce because any arguable burden does not exceed the public benefits of the ordinances,' 550 U.S. at 346 [127 S.Ct. 1786], we perhaps could conduct the balancing test on the record as it exists and even conclude that any incidental burden on interstate commerce does or does not exceed the public benefits of the presently considered ordinances. We will not do so, however. We find the Second Circuit's opinion in United Haulers Ass'n v. Oneida-Herkimer Solid Waste Management, 261 F.3d 245 (2d Cir.2001), to be particularly instructive. The Second Circuit correctly predicted the Supreme Court's eventual holding that `[f]low 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.' Id. at 263. It then `admit[ted] a temptation to undertake the Pike balancing test in the first instance, ... [a] temptation[, which] ... arises from the well-settled principle that waste disposal is a traditional local government function.' Id. at 263-64. The court nonetheless decided to `resist the temptation to rule as a matter of law prior to adequate discovery and further argument by the parties, which will undoubtedly assist the District Court in this fact-intensive determination. ' Id. at 263-64. It concluded: `We ... hold ... that although it does not, in and of itself, give a municipality free reign to place burdens on the free flow of commerce between the states, the fact that a municipality is acting within its traditional purview must factor into the District Court's determination of whether the local interests are substantially outweighed by the burdens on interstate commerce. With that understanding, we reverse and remand for a determination of whether the Counties' flow control laws pass constitutional muster under the Pike balancing test. ' Id. at 264. Only after the district court conducted the Pike balancing test and the Second Circuit affirmed did the Supreme Court's plurality in Part II.D affirm the application of the test. See United Haulers, 127 S.Ct. at 1797-98. (Emphasis added.) Lebanon Farms Disposal, Inc., 538 F.3d at 251-52. The Third Circuit concluded in Lebanon Farms Disposal, Inc., that remand was appropriate: We will follow the approach of the Second Circuit. We will remand to the District Court to conduct the Pike balancing test and make findings of fact and conclusions of law for the record. In its present form, the record is incomplete regarding the burden on interstate commerce and, more importantly, the putative local benefits. Because the District Court did not have the benefit of the Supreme Court's decision in United Haulers and because we do not have the benefit of the District Court's findings of fact and conclusions of law under the now relevant standard, we will remand with instructions to apply the Pike balancing test in accordance with Part II.D of United Haulers. After development of a proper factual record, this court will be in a better position to review the District Court's factual and legal conclusions, if asked.  (Emphasis added.) 538 F.3d at 252. We find further guidance in Selevan v. New York Thruway Authority, 584 F.3d 82 (2d Cir.2009). There, similar to the instant case, the district court granted the defendant's motion to dismiss plaintiffs' Commerce Clause claim because it failed to allege that the defendant's policy discriminates against interstate commerce. And identical to the instant case: [T]he District Court incorrectly failed to further inquire if the policy otherwise violated the Commerce Clause. Specifically, the District Court did not acknowledge the well-established rule that, under the so-called Pike test, a nondiscriminatory regulation that `regulates even-handedly to effectuate a legitimate local public interest,' Pike v. Bruce Church. Inc., 397 U.S. 137, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970), is nevertheless unconstitutional if `the burden imposed on interstate commerce is clearly excessive in relation to the putative local benefits.' United Haulers Ass'n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 346, 127 S.Ct. 1786, 167 L.Ed.2d 655 (2007) (quoting Pike, 397 U.S. at 142, 90 S.Ct. 844). Selevan, 584 F.3d at 95. The Second Circuit held that the plaintiffs' allegations were sufficient to state a claim under the Commerce Clause and the district court erred in dismissing. Instead of attempting to perform further analysis, e.g., under Pike, the Second Circuit reversed and remanded, directing that the district court perform the analysis to determine whether the dormant Commerce Clause had been violated by the policy. See also Association of Intern. Auto. Mfrs., Inc. v. Abrams, 84 F.3d 602, 612-13 (2d Cir.1996) (summary judgment on Commerce Clause claim concerning preemption inappropriate; [s]ince there are genuine factual issues as to both the claimed burdens and the putative benefits created by the New York bumper statute, we remand for further development of the record in order to permit the district court to apply the Pike v. Bruce Church balancing test); Blue Circle Cement, Inc., 27 F.3d at 1512 (district court erroneously failed to conduct the Pike analysis after plaintiff had presented evidence creating material fact issues as to the Commerce Clause implications of the county ordinance and suggested it possessed other evidence of same; summary judgment reversed and remanded). As mentioned, we ordered the parties to thoroughly address why, or why not, future discovery was necessary to resolve the Board's alleged violation of the Commerce Clause. We acknowledge the numerous additional arguments the Board makes to contend no remand for factual development is necessary, i.e., the impact on interstate commerce is speculative and [i]f this Court were to conclude that a Pike style test should be applied, there are numerous factors weighing overwhelmingly in favor of Wabaunsee County. The Board further points out that the zoning regulation is an exercise of police power, not commerce power, and for that reason enjoys a strong presumption of validity, citing Maine v. Taylor, 477 U.S. 131, 138, 106 S.Ct. 2440, 91 L.Ed.2d 110 (1986). All of the Board's arguments converge on a single point, however: that we should decide the balancing as a matter of law, when we only have the Board's arguments to consider. No fact-based arguments have been developed for the Plaintiffs and Intervenors. For example, this court cannot know how much electricity would be generated from Wabaunsee County wind and eventually kept out of the interstate power grid if there were no Board prohibition against CWECS. This type of information would be relevant in a Pike analysis. Cf. Pike, 397 U.S. at 145, 90 S.Ct. 844 (compelling grower to build packing facilities that would cost approximately $200,000 constituted unlawful burden on interstate commerce). Over objection of the Plaintiffs and Intervenors, they were denied a meaningful opportunity to discovery and an evidentiary hearing. Plaintiffs specifically argued in their response to the Board's motion to dismiss that at best, no information has been developed to allow the Court to balance burdens and benefits of the County's ban of commercial wind energy generation systems. After reading the briefs, hearing arguments and considering the case law stated above, we conclude this issue should be reversed and remanded to the district court. The court should allow discovery, conduct the Pike balancing test, and make findings of fact and conclusions of law for the record. After development of a proper factual record, this court will be in a better position to review the district court's factual and legal conclusions, if asked. See Lebanon Farms Disposal, 538 F.3d at 251.