Court Opinion

ID: 3023513
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:29:07.769633+00
Date Added: 2024-06-11T18:18:40.090110
License: Public Domain

United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                  ___________

                                  No. 98-3594
                                  ___________
United Waste Systems of Iowa, Inc.;       *
Central Disposal Systems, Inc.,           *
                                          * Appeal from the United States
             Appellants,                  * District Court for the
                                          * Southern District of Iowa.
   v.                                     *
                                          *
Larry Wilson, in his official capacity as *
the Director of the Iowa Department of *
Natural Resources,                        *
                                          *
             Appellee.                    *

                                  ___________

                            Submitted: May 13, 1999
                                Filed: September 7, 1999
                                 ___________

Before LOKEN, HANSEN, and MURPHY, Circuit Judges.
                           ___________

HANSEN, Circuit Judge.

      United Waste Systems of Iowa, Inc. (United Waste) and Central Disposal
Systems, Inc. (Central Disposal) brought this action against the Iowa Department of
Natural Resources (IDNR) in which they alleged that Iowa's solid waste disposal
program violates the Commerce Clause of the United States Constitution. See U.S.
Const. art. I, § 8, cl. 3. The district court1 found no Commerce Clause violation and
granted summary judgment in favor of IDNR. United Waste and Central Disposal
appeal. We affirm.

                                          I.
                         FACTS AND BACKGROUND

        Iowa law requires “[e]very city and county of [the] state [of Iowa] [to]
provide for the establishment and operation of a comprehensive solid waste
reduction program . . . and a sanitary disposal project for final disposal of solid
waste by its residents.” Iowa Code § 455B.302 (1997). Iowa law further requires
all cities and counties of the state of Iowa to file a comprehensive plan with the
IDNR detailing how they will comply with section 455B.302. See Iowa Code §
455B.306(1). The comprehensive plan submitted by the city or county must
include a description of the service area to be served. The comprehensive plan may
not, however, "include a service area, any part of which is included in another
comprehensive plan.” Iowa Code § 455B.306(6)(e).

      The IDNR interprets Iowa Code §§ 455B.302 and 455B.306 as granting cities
and counties complete discretion to contract with landfill operators and garbage
haulers. Cities and counties may choose to send all or a portion of their waste to
an out-of-state facility. See Iowa Admin. Code r. 567-101.4 (1992). If the cities and
counties elect to dispose of all or a portion of their waste within the state of Iowa,
they must select a single landfill as a waste repository for the waste that will be
disposed of in Iowa. Once the city or county designates a landfill for its in-state
disposal needs, it must include this designation in its comprehensive plan that it

      1
        The Honorable Robert W. Pratt, United States District Judge for the Southern
District of Iowa.

                                         -2-
files with the IDNR pursuant to § 455B.306. The city or county then is permitted
to dispose of its solid waste only at the landfill location designated in its
comprehensive plan. Garbage haulers who contract with the city or county must
transport the solid waste only to the landfill designated in the comprehensive plan.
The state of Iowa forbids garbage haulers from transporting waste for a county or
city to a facility not designated in that county's or city's comprehensive plan.
Similarly, a landfill may not receive solid waste from a city or county that has not
designated the landfill in its comprehensive plan.2

      United Waste is a garbage hauling company with its principal place of
business in Lake Mills, Iowa. Central Disposal is a waste disposal company, which
operates a landfill near Lake Mills. Central Disposal’s landfill receives waste from
Iowa and Minnesota.

       United Waste and Central Disposal filed a declaratory judgment action
against the state of Iowa in which they alleged that IDNR’s interpretation of Iowa
Code §§ 455B.302 and 455B.306 violates the Commerce Clause of the United
States Constitution as well as Iowa state law. Specifically, United Waste contends
that the restrictions imposed by IDNR’s interpretation infringes upon its freedom
to choose the landfill destination for the solid waste that it hauls from the cities and
counties. Central Disposal contends that IDNR’s restrictions prevent it from
receiving waste at its landfill from cities and counties that have not designated
Central Disposal in their comprehensive plan. Both companies claim that IDNR’s
interpretation causes them to lose a substantial amount of business. Thus, they
contend that IDNR’s interpretation unduly burdens interstate commerce because,

      2
      Iowa law also requires landfill operators to file a comprehensive plan with the
IDNR indicating which cities and counties have agreed to utilize their landfill. See
Iowa Admin. Code r. 567-101.5 (1992).

                                          -3-
absent the restriction, the two companies would purchase additional fuel,
equipment, and supplies from out of state businesses.

       The district court rejected the companies’ Commerce Clause argument. The
district court found that the benefits of IDNR’s regulatory scheme are “readily
apparent” and "substantially outweigh the interstate-commerce-expenditure
reductions of one landfill." (Dist. Ct. Order at 2). The district court granted
summary judgment to the state of Iowa on the Commerce Clause claim and
dismissed the state law claims without prejudice for lack of jurisdiction. United
Waste and Central Disposal appeal.

                                       II.
                                   DISCUSSION

       We review de novo the district court’s summary judgment determinations. See
JN Exploration & Prod. v. Western Gas Resources, Inc., 153 F.3d 906, 909 (8th Cir.
1998).

                                         A.
                               Interstate Commerce

        The Commerce Clause of the United States Constitution grants Congress the
power to regulate commerce between the states. U.S. Const. art. I, § 8, cl. 3. Implicit
within the Commerce Clause is a negative or dormant feature that prevents individual
states from regulating interstate commerce. See CTS Corp. v. Dynamics Corp. of Am.,
481 U.S. 69, 87 (1987); Wabash, St. L. &. P. Ry. Co. v. Illinois, 118 U.S. 557, 577
(1886). In evaluating whether a challenged state regulation impermissibly infringes
upon interstate commerce, a court first must determine whether the regulation even

                                          -4-
affects interstate commerce. See Pike v. Bruce Church, Inc., 397 U.S. 137, 141-42
(1970).

       The test for determining if a challenged regulation affects interstate commerce
is by no means clear. The Supreme Court has upheld state regulatory schemes that
impose a purely local burden or where the effect on interstate commerce is “at the most
indirect and remote.” Id. at 141. In Federal Compress & Warehouse Co. v. McLean,
291 U.S. 17, 21 (1934), and Chassaniol v. City of Greenwood, 291 U.S. 584, 587
(1934), the Supreme Court held that the warehousing and ginning of cotton were purely
local activities and, therefore, a tax imposed on such an activity did not run afoul of the
dormant Commerce Clause. In Wickard v. Filburn, 317 U.S. 111, 127-28 (1942),
however, the Court held that the Commerce Clause permitted Congress to regulate a
farmer's production of wheat even if the wheat was used purely for home consumption.
The Court found that even though one farmer's production of wheat for home
consumption could not implicate interstate commerce, the cumulative effect of home
consumption of wheat by several farmers could alter the interstate market. See id. at
28-29. Following Wickard, the cumulative effects rationale became the test for
sustaining legislation against attacks that Congress exceeded its power under the
Commerce Clause. For example, in the 1960s, the Court employed the cumulative
effects test when it upheld congressional civil rights legislation where the regulated
activity, as it applied against single individuals or business entities, had no discernable
effect on interstate commerce. See Katzenbach v. McClung, 379 U.S. 294, 300-01
(1964) (upholding Title II of the Civil Rights Act of 1964 by finding that racial
discrimination at local restaurants burdened interstate commerce); Heart of Atlanta
Motel, Inc. v. United States, 379 U.S. 241, 258 (1964) (finding that racial
discrimination by local motels burdened interstate commerce). The Supreme Court's
fairly recent decision in United States v. Lopez, where the Court held the Gun-Free
School Zones Act of 1990 unconstitutional, represents the first significant judicial
curtailment of the expansiveness of the cumulative effects test in nearly 60 years. See

                                           -5-
514 U.S. 549, 561 (1995) (declining to rely on the cumulative effects cases because the
criminal statute at issue had no relation to economic enterprise).

        We note that Wickard, Katzenbach, Heart of Atlanta Motel, and Lopez involved
challenges to Congress's express power to regulate under the Commerce Clause. As
the instant case involves a challenge to a state regulation's impact on interstate
commerce, we turn to the germinal case for evaluating legislation challenged under the
dormant features of the Commerce Clause. In Pike, the Supreme Court held that an
Arizona regulation affecting only goods that had not yet entered the stream of interstate
commerce nevertheless implicated interstate commerce. Pike, 397 U.S. 140-42. The
regulation burdened interstate commerce because it required companies to package
cantaloupes in Arizona, rather than other states, before shipping the goods outside of
Arizona. The Court premised its holding in part on the fact that the goods "were
destined to be shipped to an ascertainable location [outside the state of Arizona]
immediately upon harvest." Pike, 397 U.S. at 141. The Court in Pike did not overrule
its prior decisions in McLean and Chassaniol. Rather, the Pike Court surmised that the
regulations upheld in McLean and Chassaniol were based either on the fact that the tax
was imposed before an interstate destination for the cotton was chosen or on the fact
that the burden on interstate commerce was at most indirect. See Pike, 397 U.S. at
141. The latter rationale is applicable in the instant case.

      The state of Iowa imposes a regulatory scheme that forces cities and counties to
designate a landfill in a comprehensive plan. The designation requirement applies only
to waste that will remain in the state of Iowa. The state of Iowa does not force cities
and counties to contract with a particular landfill. Rather, the cities and counties are
afforded complete discretion to contract with the landfill of their choice. Regardless
of the designation scheme and the comprehensive plans, the cities and counties may
send some or all of their waste to landfills located beyond the state's borders. If the city
or county elects to dispose of any of its waste at an in-state facility, it may contract with
any landfill in the state of Iowa. Once a city or county chooses an in-state landfill,

                                            -6-
however, it must designate that landfill in its comprehensive plan and utilize only that
landfill for its in-state disposal needs.

        Cities and counties in Iowa are free to renegotiate their landfill contracts and
alter their comprehensive plans to designate a different landfill. Hence, although a city
or county that contracts with an Iowa landfill is bound to utilize only that Iowa landfill,
the city or county has the option of amending its comprehensive plan and re-designating
a different landfill. Under Iowa's rubric, interstate commerce does not even appear to
be implicated. The cities and counties of Iowa are completely free to contract with
United Waste and Central Disposal in the same manner that they may contract with any
other provider of services. The two companies bear the competitive burden of
convincing the cities and counties to utilize their services and designate Central
Disposal in their comprehensive plan.

      The companies argue that the regulation affects interstate commerce because it
causes them to lose business (that they do not now have), and the alleged loss of future
business restricts them from buying increased goods and services from out-of-state
vendors. We find this argument barely believable. It appears to us that United Waste's
and Central Disposal’s alleged loss of business stems not from the regulation itself but
from their failure to persuade the cities and counties of Iowa to do business with them
and to designate Central Disposal's landfill in the comprehensive plans.3 The

      3
        The Appellants' solicited landfill business through a form letter, which was sent
to 49 municipalities in north central Iowa. (See Appellants' App. at 332-33.) The letter
is not a model of modern sales and marketing techniques. As some of the responses
indicate, the municipalities were offended by the rather presumptuous and high-handed
tone of the appellants' overture. ("Unless we receive from your office a letter denying
cooperation prior to Monday, July 21, 1997, we will include your community in our list
of cooperating communities to be filed with the Iowa DNR as part of Central Disposal's
comprehensive plan.") (Appellants' App. at 333.) The cities' responses included such
statements as: "I find it rather arrogant of your company to include our community in

                                           -7-
companies’ assertion demonstrates, at best, only an attenuated effect on interstate
commerce. If taken to an extreme, every state regulation would have some minimal
effect on interstate commerce. In this case, we must conclude that the regulation's
effect on interstate commerce is, at most, extremely attenuated, remote, incidental, and
highly speculative. See Ben Oehrleins & Sons & Daughter v. Hennepin County, 115
F.3d 1372, 1387 (8th Cir.) ("Restrictions on the ability of companies, regardless of
state origin, to process . . . waste [intrastate] may be relevant to the Commerce Clause
issue") (emphasis added), cert. denied, 118 S. Ct. 629 (1997) and 118 S. Ct. 643
(1997).

                                      B.
                           The Commerce Clause Inquiry

       When evaluating a challenged regulation that impacts at least incidentally on
interstate commerce, a court first must determine if the regulation fosters protectionist
discrimination by favoring local businesses over out-of-state companies. See C&A
Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 392-94 (1994); Ben Oehrleins,

your comprehensive plan without a written request from us. I should not have to take
the time to write a letter to fend off your companies [sic] actions, when we have never
given your company the slightest indication that we would use your facility." (Letter
from the City Clerk of Ventura, Iowa) (Appellants' App. at 343.) "I would like to know
what gives your company the right to include our community in your comprehensive
plan without a request from us to dispose of waste at your site. I should not have to
write this letter denying cooperation with your landfill. We have never written, spoken
or given any indication that we wanted to be part of your facility." (Letter from the
City Manager of Hampton, Iowa) (Appellants' App. at 346.) A number of responses
are identical and accuse the appellants of "trying to interfere with our existing contract."
(See, e.g., Letter from City of Garner, Iowa) (Appellants' App. at 344.) Other
responses invited the appellants to make a presentation at a future city council meeting.
(See Letter from City Attorney of Luverne, Iowa) (Appellants' App. at 361.)

                                            -8-
115 F.3d at 1383. If such protectionist discrimination exists, the regulation "is per se
invalid, save in a narrow class of cases in which the [state] can demonstrate, under
rigorous scrutiny, that it has no other means to advance a legitimate local interest."
Carbone, 511 U.S. at 392. This case lacks the type of protectionist discrimination
described in Carbone. Again, Iowa's regulation freely permits political subdivisions to
send their waste to out-of-state facilities. The designation scheme is implicated only
when the cities or counties choose to dispose of their waste within the state of Iowa.
See Ben Oehrleins, 115 F.3d at 1387 (holding that a purely intrastate designation
scheme does not discriminate against interstate commerce and is not per se invalid).
Cf. Carbone, 511 U.S. at 389 (finding a burden on interstate commerce where the
ordinance prevented out-of-state companies from obtaining access to the local
markets). No aspect of the Iowa regulation evinces a purposeful or even an
unintentional design to discriminate in favor of local businesses.

        Iowa's system is an evenhanded regulatory scheme. When a challenged scheme
“regulates evenhandedly 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.” Pike,
397 U.S. at 142; see also Huron Cement Co. v. Detroit, 362 U.S. 440, 443 (1960)
("Evenhanded local regulation to effectuate a legitimate public interest is valid unless
. . . unduly burdensome on . . . interstate commerce.") In this case, the challenged
regulation easily passes the Pike test. First, as we explained in Part II(A) of this
opinion, any effect on interstate commerce is not more than incidental. Thus, the
challenged regulation must be upheld as long as the incidental effect is not clearly
excessive in relation to the public benefit. According to the state of Iowa, the
regulation serves to (1) allow the state to track the destination of Iowa’s waste, (2)
allow cities and counties to control and operate safe landfills that comply with Iowa
law, (3) allow cities and counties to maintain control of their waste, and (4) foster the
collection of tipping fees that fund various state recycling and pollution hotline

                                          -9-
programs. (See Appellee’s Br. at 27-28.) Tracking and controlling in-state waste are
valid and legitimate state objectives.

       The companies argue that less restrictive alternatives exist that will accomplish
Iowa's objectives. The companies' argument suggests that we employ some type of
heightened scrutiny in examining Iowa's regulation. Heightened scrutiny is appropriate,
however, only if the challenged regulation's burden "bear[s] more heavily on interstate
commerce than on local commerce." National Paint & Coatings Ass'n v. City of
Chicago, 45 F.3d 1124, 1131 (7th Cir.), cert. denied, 515 U.S. 1143 (1995).
Otherwise, "there is no reason to require special justification." Id. at 1132; see also
Ben Oehrleins, 115 F.3d at 1383 ("A non-discriminatory state law . . . is subject to a
less rigorous balancing test."). In this case, the effect of the regulation on interstate
commerce is at most incidental and more likely nonexistent. The local benefit easily
outweighs any possible minimal effect on interstate commerce. Tracking and
controlling waste are legitimate state policy goals that should not be disturbed simply
because two frustrated local companies have failed to convince Iowa's nearby cities and
counties to patronize them. We require far more compelling evidence of a real and un-
imagined burden on interstate commerce before we will discard a state law that
provides some form of local benefit. See Middle South Energy, Inc. v. Arkansas Pub.
Serv. Comm'n, 772 F.2d 404, 416 (8th Cir. 1985) (noting that the balancing test applied
to facially neutral regulations "is far more deferential to the states"), cert. denied, 474
U.S. 1102 (1986). Accordingly, we find that IDNR’s interpretation passes the Pike test
and, consequently, we uphold the regulation.4

      4
        IDNR also argues that its regulatory scheme should be upheld because it is a
market share participant. See White v. Massachusetts Council of Constr. Employers,
Inc., 460 U.S. 204, 208 (1983). IDNR did not raise this argument before the district
court, and we decline to address arguments advanced for the first time on appeal. See
Carter v. Chrysler Corp., 173 F.3d 693, 704 n.9 (8th Cir. 1999). More importantly,
however, our decision in this case renders a market share participant evaluation
unnecessary.

                                           -10-
                                        C.
                                 State Law Claims

       Finally, United Waste and Central Disposal raise state law challenges to IDNR's
interpretation of the applicable provisions of the Iowa Code. The companies argue that
in accordance with Iowa law, IDNR has no designation authority, IDNR's interpretation
violates permit protections, and IDNR's designation scheme creates an absurd result.
Having adjudicated the companies' federal law claims, the district court properly
dismissed the companies' state law claims without prejudice. See 28 U.S.C. §
1367(c)(3).

                                      III.
                                  CONCLUSION

      For the reasons stated herein, we affirm the judgment of the district court.

      A true copy.

             Attest:

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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