Court Opinion

ID: 2969446
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:48:58.992324+00
Date Added: 2024-06-11T11:43:24.765547
License: Public Domain

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20   Huish Detergents v. Warren                   No. 98-5566                  Pursuant to Sixth Circuit Rule 206
     County, Kentucky, et al.                                          ELECTRONIC CITATION: 2000 FED App. 0182P (6th Cir.)
                                                                                   File Name: 00a0182p.06

                 ______________________
                    CONCURRENCE
                                                                   UNITED STATES COURT OF APPEALS
                 ______________________                                          FOR THE SIXTH CIRCUIT
                                                                                   _________________
  CLAY, Circuit Judge, concurring. I agree with the
majority’s reasoning and holding as far as it goes, but I would
                                                                                                     ;
proceed to hold that the County also violated the Commerce
                                                                                                      
Clause by designating Monarch as the exclusive waste hauler         HUISH DETERGENTS, INC.,
                                                                                                      
and processor for municipal waste. It appears abundantly                     Plaintiff-Appellant,
                                                                                                      
clear on the record below, and not subject to serious dispute,
                                                                                                      
that the County instituted a comprehensive monopolistic                                                   No. 98-5566
                                                                               v.
                                                                                                      
scheme by which it used its regulatory power to favor a single                                         >
                                                                                                      
provider of waste removal, disposal and processing services,
                                                                    WARREN COUNTY,
                                                                                                      
and by so doing eliminated other potential local and interstate

                                                                                                      
waste services providers from the relevant market. I would          KENTUCKY; MONARCH

                                                                             Defendants-Appellees. 
not attempt to truncate the analysis with regard to segments of     ENVIRONMENTAL, INC.,
                                                                                                      
the local waste disposal process, as does the majority opinion,

                                                                                                     1
inasmuch as the County awarded a single monopoly to
Monarch with respect to all aspects of the waste disposal
business in Warren County.
                                                                           Appeal from the United States District Court
   The ordinance and finance agreement favor a single waste          for the Western District of Kentucky at Bowling Green.
hauler and processor to the detriment of both in-state and out-     No. 97-00123—Joseph H. McKinley, Jr., District Judge.
of-state competitors by forcing all who generate waste in
Bowling Green to use the services of Monarch at a rate                             Argued: April 27, 1999
designated by Warren County and Monarch. Given the way
in which vertical integration of the waste disposal services are               Decided and Filed: May 31, 2000
provided by Monarch pursuant to its arrangement with the
County for waste collection, hauling, processing and disposal,       Before: RYAN, BATCHELDER, and CLAY, Circuit
and given the comprehensiveness of the contractual                                     Judges.
arrangement between the County and Monarch, I would hold
that the County violated the Commerce Clause by designating                          _________________
Monarch as the exclusive waste hauler and processor for                                   COUNSEL
municipal waste--notwithstanding the district court’s
inappropriate failure to address the issue. I concur with the      ARGUED: Walter M. Jones, WYATT, TARRANT &
majority opinion in all other respects.                            COMBS, Louisville, Kentucky, for Appellant. Dennis J.
                                                                   Conniff, BROWN, TODD & HEYBURN, Louisville,
                                                                   Kentucky, for Appellees. ON BRIEF: Walter M. Jones,

                                                                                               1
2    Huish Detergents v. Warren                 No. 98-5566      No. 98-5566                 Huish Detergents v. Warren       19
     County, Kentucky, et al.                                                                   County, Kentucky, et al.

Stephen D. Berger, Cynthia B. Doll, WYATT, TARRANT &             purchasing for it. In so doing, the County opened itself up to
COMBS, Louisville, Kentucky, for Appellant. Dennis J.            Commerce Clause scrutiny. The Supreme Court has
Conniff, Larisa E. Gilbert, BROWN, TODD & HEYBURN,               explicitly “reject[ed] the contention that a State’s action as a
Louisville, Kentucky, Michael E. Caudill, Bowling Green,         market regulator may be upheld against Commerce Clause
Kentucky, for Appellees.                                         challenge on the ground that the State could achieve the same
                                                                 end as a market participant.” South-Central Timber Dev., 467
  RYAN, J., delivered the opinion of the court, in which         U.S. at 98-99 (1984); cf. Chemical Waste Mgt., 504 U.S. at
BATCHELDER, J., joined. CLAY, J. (p. 20), delivered a            351 (Rehnquist, C.J., dissenting).
separate concurring opinion.
                                                                    Given our holdings in subsections (a) and (b) above, and
                    _________________                            our understanding that the district court did not specifically
                                                                 address whether the County violated the Commerce Clause by
                        OPINION                                  designating Monarch as the exclusive waste collector and
                    _________________                            processor for municipal waste, it is unnecessary for us to
                                                                 decide this issue here. We note that some courts considering
   RYAN, Circuit Judge. Huish Detergents, Inc., challenges       the award of an exclusive waste collecting or processing
an ordinance enacted by Warren County, Kentucky, and a           franchise, following an RFP, focus their inquiry on whether
franchise agreement entered into by Warren County and            in-state and out-of-state businesses competed on a level
Monarch Environmental, Inc., pursuant to which Monarch is        playing field. See, e.g., Houlton Citizens’ Coalition v. Town
the exclusive contractor for collecting and processing all the   of Houlton, 175 F.3d 178, 188-89 (1st Cir. 1999); Atlantic
solid waste generated in the city of Bowling Green, Kentucky.    Coast Demolition & Recycling, 48 F.3d at 713. We express
Huish’s claim is that the ordinance and companion agreement      no opinion on this approach or its potential application to the
violate both the so-called “dormant” Commerce Clause of the      County’s ordinance/franchise scheme.
United States Constitution and the Kentucky Constitution.
The district court dismissed the suit under Fed. R. Civ. P.                                    III.
12(b)(6) for failure to state a claim upon which relief may be
granted. Because we hold that the district court erred in          The district court’s dismissal of this action is REVERSED,
dismissing Huish’s Commerce Clause claim, we reverse.            and the case is REMANDED for further proceedings
                                                                 consistent with this opinion. Because we are reversing the
                              I.                                 dismissal of the Commerce Clause claim, we also REVERSE
                                                                 the dismissal of the section 1983 and state law claims. They
  Warren County, Kentucky, issued a Request for Proposal         too are REMANDED.
(RFP) and considered competitive bids from trash haulers
interested in collecting and processing all municipal solid
waste in Bowling Green, Kentucky. The County awarded the
contract to Monarch and formalized the relationship in a
written “franchise agreement.”        Under the franchise
agreement, Monarch has the exclusive right for five years
(1995-2000) to collect and process all municipal solid waste
generated in Bowling Green. Monarch is obligated to operate
18   Huish Detergents v. Warren                   No. 98-5566      No. 98-5566                 Huish Detergents v. Warren        3
     County, Kentucky, et al.                                                                     County, Kentucky, et al.

The County’s prohibition on out-of-state disposal, therefore,      the city’s transfer station to process the waste it collects and
is subject to the restrictions of the Commerce Clause.             must dispose of all waste at a landfill “approved and
                                                                   permitted by the State of Kentucky,” effectively prohibiting
  Although Carbone dealt with waste processing, its holding        the use of out-of-state disposal sites. The agreement can be
applies with equal force to the waste disposal market,             renewed for three terms of five years each and will renew
compelling the conclusion that the County violated the             automatically for a five-year term absent prior notice by one
Commerce Clause by prohibiting out-of-state disposal. See          of the parties.
SSC, 66 F.3d at 514. This prohibition facially discriminates
against out-of-state disposal services which, again, constitutes      The franchise agreement provides that all residential,
a per se violation sufficient, in and of itself, to survive the    commercial, and industrial entities that generate municipal
Rule 12(b)(6) motion.                                              solid waste in Bowling Green must employ Monarch to
                                                                   remove that waste; waste generators may not remove their
c. Award of “Exclusive Franchise” to a Single In-State             own waste, and they are prohibited from using any company
           Waste Collector and Processor                           other than Monarch. Monarch bills its Bowling Green
                                                                   customers directly according to a fee schedule fixed by the
  The district court declined to address the merits of Huish’s     franchise agreement; Monarch is solely responsible for
challenge to Monarch’s “exclusive franchise” for waste             collecting payment. The County receives a portion of the
collection and processing on the grounds that the County was       revenues Monarch generates servicing Bowling Green
a market participant. The court reasoned that the County,          businesses and residents, and Monarch removes the waste
through its franchise agreement, effectively “purchased”           generated at the County’s own buildings at no charge.
waste collection and processing services. We respectfully
disagree.                                                             On the same day that the franchise agreement became
                                                                   effective, the County passed an ordinance “executing” the
   The County used its regulatory power—not its proprietary        franchise agreement and incorporating its provisions by
purchasing power—to retain Monarch’s services by requiring         reference. In essence, the ordinance transforms the franchise
the County’s residents to pay for those services. Stated           agreement provisions into law.
another way, the County used its regulatory power to grant an
exclusive right to collect and process Bowling Green waste,          Huish operates a laundry detergent manufacturing facility
a result that no private party could accomplish on an open         in Bowling Green. Not surprisingly, this facility generates
market. The district court observed that the County would          considerable solid waste. Under the ordinance and franchise
have been a market participant had it purchased Monarch’s          agreement, Huish must use Monarch to remove this waste.
services with “its own funds,” and reasoned that the exception     Huish filed this lawsuit seeking to invalidate the County’s
was still applicable where the County directed its residents to    ordinance/franchise scheme, claiming that the scheme violates
purchase Monarch’s services. We agree with the district court      the Commerce Clause , 42 U.S.C. § 1983, and section 164 of
that the County could have achieved the same result, without       the Kentucky Constitution.
implicating the Commerce Clause, by hiring Monarch as its
exclusive waste hauler using public funds to pay for the             The district court dismissed Huish’s complaint pursuant to
service. But the County rejected that strategy, opting instead     Fed. R. Civ. P. 12(b)(6). The court first concluded that the
to apply its regulatory leverage by forcing residents to do the    County is not entitled to Eleventh Amendment immunity and
4    Huish Detergents v. Warren                   No. 98-5566      No. 98-5566                Huish Detergents v. Warren      17
     County, Kentucky, et al.                                                                    County, Kentucky, et al.

that Huish has the requisite standing to bring suit. With          Carbone and discriminated against the interstate flow of
respect to the Commerce Clause claim, the court took the           waste for processing out-of-state.
view that the County engaged in two separate challenged
activities: (1) “taking over” the local waste collection,             Such discrimination constitutes a per se violation of the
processing, and disposal markets; and (2) granting Monarch         dormant aspect of the Commerce Clause, “absent the clearest
the exclusive right to collect, process, and dispose of waste      showing that the unobstructed flow of interstate commerce
generated in Bowling Green.                                        itself is unable to solve the local problem.” Carbone, 511
U.S. at 393. The County’s conclusory justification for its
  The court began its analysis of Huish’s Commerce Clause          actions—that it wanted to assure the “safe and efficient”
claim by examining the County’s decision to prohibit               collection and disposal of solid waste—does not satisfy this
residents from independently purchasing waste collection,          stringent test. See id. Even if we were to accept these
processing, or disposal services on the open market, which the     nonspecific goals as legitimate local interests, the County
court described as the County’s “takeover” of the local waste      offers no explanation why these goals cannot be satisfied out-
collection market. The court held, as a preliminary matter,        of-state. See Fort Gratiot, 504 U.S. at 366-67; Chemical
that the County was not acting as a market participant in          Waste Mgt., 504 U.S. at 343-44.
taking this action and, therefore, its action was subject to
Commerce Clause restrictions. Proceeding with a “dormant             We hold, therefore, that for all these reasons, Huish’s
Commerce Clause” analysis, the district court concluded that       Commerce Clause claim survives the defendants’ Rule
the County’s “takeover” of Bowling Green’s waste collection,       12(b)(6) motion. While this holding alone requires that we
processing, and disposal market did not violate the dormant        reverse the district court’s judgment, we will proceed to
Commerce Clause. The court reasoned that the “takeover”            consider Huish’s remaining arguments, at least to the extent
did not discriminate against interstate commerce and that the      that the district court purported to address them.
burden imposed on interstate commerce was not excessive in
relation to the benefits for the County.                                    b. Prohibition on Out-of-State Disposal

   As to the second issue, the district court concluded that the      The County did not act as a market participant in
County acted as a market participant in awarding an exclusive      prohibiting out-of-state disposal of Bowling Green’s
franchise to Monarch. According to the district court, the         municipal waste because the County neither bought nor sold
County “purchased” waste removal and processing services           disposal services with taxpayer funds. Indeed, even if the
and was free to choose Monarch as the County’s provider of         County’s “agreement” with Monarch constituted market
these services. In light of its conclusion that the market         participation in either the waste collection or processing
participant exception applied, the district court did not          markets, the market participant exception would not insulate
address whether the franchise agreement with Monarch ran           the County’s regulation of the separate waste disposal market,
afoul of the Commerce Clause.                                      which is downstream from the collection and processing
                                                                   markets. See South-Central Timber Dev., Inc. v. Wunnicke,
  The court then dismissed Huish’s federal claims with             467 U.S. 82, 97-98 (1984) (plurality opinion); SSC, 66 F.3d
prejudice and its pendent state law claim without prejudice.       at 515-16. Cf. Incorporated Village of Rockville Centre v.
This appeal followed.                                              Town of Hempstead, 196 F.3d 395, 399-400 (2d Cir. 1999).
16    Huish Detergents v. Warren                   No. 98-5566      No. 98-5566                 Huish Detergents v. Warren          5
      County, Kentucky, et al.                                                                     County, Kentucky, et al.

a municipality labels its action as an “agreement.” Rather, we                                     II.
must determine whether the municipality was acting in a
proprietary capacity as a purchaser or seller with regard to the                           A. STANDING
challenged action.
                                                                      At the outset, we must address the defendants’ contention
   Here, it is clear that the County was not acting in a            that Huish lacks standing to bring this action. The defendants
proprietary capacity in forcing all municipal waste to flow         claim that, inasmuch as Huish is not a member of the solid
through the city’s transfer station. The County was not             waste industry, its injuries do not fall within the zone of
“purchasing” the processing services with public funds, nor         interests protected under the Commerce Clause. The district
was it “selling” its own processing services. These factors         court concluded that Huish has standing, and we agree.
routinely govern courts’ analysis of the market participant
exception in the waste context. See USA Recycling, 66 F.3d            In cases such as this involving a constitutional claim, the
at 1288-89, 1291; SSC, 66 F.3d at 515-16; GSW, Inc. v. Long         plaintiff must satisfy two tests for standing: first, it must meet
Cty., Georgia, 999 F.2d 1508, 1513-14 (11th Cir. 1993). “A          basic Article III constitutional requirements; and second, the
governmental entity which expends or risks no public money          plaintiff’s injury must fall within the “zone of interests”
. . . is not subject to the vagaries of the market and need be      protected by the constitutional guarantee.
afforded no corresponding freedom” under the market
participation doctrine. See GSW, 999 F.2d at 1514. By                 To establish Article III standing, Huish must demonstrate:
effectively forcing all city residents to purchase the processing   (1) an injury in fact that is actual or threatened; (2) a causal
services directly from Monarch, the County’s action far             connection between the defendants’ conduct and the alleged
exceeded that which a private entity could accomplish on the        injury; and (3) a substantial likelihood that the injury will be
free market. See SSC, 66 F.3d at 512-13; Atlantic Coast             redressed by a favorable decision. Lujan v. Defenders of
Demolition & Recycling, Inc. v. Board of Chosen Freeholders         Wildlife, 504 U.S. 555, 560-61 (1992); Coyne v. American
of Atlantic Cty., 48 F.3d 701, 717 (3d Cir. 1995). Thus, the        Tobacco Co., 183 F.3d 488, 494 (6th Cir. 1999). “At the
market participation exception does not shield Warren               pleading stage, general factual allegations of injury resulting
County’s action from scrutiny under the Commerce Clause.            from the defendant’s conduct may suffice, for on a motion to
                                                                    dismiss we presum[e] that general allegations embrace those
   Carbone controls the remainder of our analysis. To be            specific facts that are necessary to support the claim.” Lujan,
sure, the essentially unitary ordinance/franchise scheme in 504 U.S. at 561 (internal quotation marks and citation
this case was not identical to the flow control ordinance in        omitted) (alteration in original).
Carbone. The county in Carbone required that all waste be
processed at the town’s transfer station. Here, on the other           We find that Huish satisfies the requirements for standing
hand, the County “contracted” with Monarch to collect and           under Article III, and, indeed, the defendants do not argue
then process all municipal waste. But the “contract” went           otherwise. Huish alleged an actual injury as a result of the
further than that. Warren County dictated where Monarch             County’s ordinance and agreement with Monarch, in
must provide the processing services—at the city’s transfer         consequence of which Huish is forced to pay Monarch more
station and nowhere else. This explicit condition is the            to collect, process, and dispose of its waste than Huish would
functional equivalent of the flow control ordinance in              spend if it could purchase one or more of these services from
                                                                    a company operating out-of-state or perform the work itself.
                                                                    The fact that Huish is not a member of the waste industry
6      Huish Detergents v. Warren                   No. 98-5566      No. 98-5566                 Huish Detergents v. Warren       15
       County, Kentucky, et al.                                                                     County, Kentucky, et al.

does not undermine the causal connection between the                 at one location within Bowling Green; and (2) the prohibition
challenged scheme and Huish’s injury as a consumer.                  on out-of-state disposal. We also note that, while we agree
                                                                     that Monarch acted as the County’s “exclusive franchisee” for
    [C]ognizable injury from unconstitutional discrimination         waste collection and processing in Bowling Green, the district
    against interstate commerce does not stop at members of          court erred in characterizing Monarch as the County’s
    the class against whom a state ultimately discriminates,         “exclusive franchisee” for waste disposal.            Monarch
    and customers of that class may also be injured, as in this      apparently was not involved in waste disposal at all, but rather
    case where the customer is liable for payment . . . and as       purchased these services from a third party.
    a result presumably pays more for the [product] . . . .
    Consumers who suffer this sort of injury from regulation           We identify Huish’s three challenges to the
    forbidden under the Commerce Clause satisfy the                  ordinance/franchise scheme as follows: (1) the designation of
    standing requirements of Article III.                            a single in-state processing station for municipal waste; (2)
                                                                     the prohibition on out-of-state waste disposal; and (3) the
General Motors Corp. v. Tracy, 519 U.S. 278, 286 (1997).             award of an “exclusive franchise” to Monarch for waste
Finally, Huish’s injury can be redressed with a favorable            collection and processing. At this stage of the proceedings,
result.                                                              Huish’s lawsuit can survive the Rule 12(b)(6) motion if any
                                                                     one of these three challenges states a valid Commerce Clause
   Huish must also satisfy a prudential limitation on our            claim.
jurisdiction—a further standing requirement—by showing
that the interest it seeks to protect “arguably fall[s] within the    a. Designation of a Single In-State Processing Station
zone of interests protected or regulated by the statutory
provision or constitutional guarantee invoked in the suit.”            The defendants contend that the County acted as a market
Bennett v. Spear, 520 U.S. 154, 162 (1997); see also                 participant in requiring Monarch to process all municipal
Association of Data Processing Serv. Orgs., Inc. v. Camp,            waste at a single Bowling Green transfer station. According
397 U.S. 150, 153 (1970). In this case, the constitutional           to the defendants, the challenged restriction is not subject to
guarantee arises under the Commerce Clause, which is                 Commerce Clause scrutiny because it appeared in an
designed to prevent economic protectionism and insure the            “agreement” with Monarch, rather than in an ordinance. We
free movement of goods between State borders, prohibiting            disagree with both the factual and legal premises of this
“laws that would excite . . . jealousies and retaliatory             argument and hold that the County was not acting as a market
measures” among the several States. C & A Carbone, Inc. v.           participant when it designated a single in-state processing site
Town of Clarkstown, New York, 511 U.S. 383, 390 (1994).              for all municipal waste.
  Huish argues that it meets this additional standing                  First, as a factual matter, the defendants overlook the
requirement because it has pleaded an injury that falls within       relationship between the ordinance and franchise agreement
the zone of interests protected by the Commerce Clause, and          scheme. The ordinance did contain the challenged restriction
we agree. Huish seeks to protect its right to contract with a        because it incorporated the full franchise agreement by
company that can transport its waste for out-of-state                reference. More importantly, the distinction that the
processing and/or disposal. In making this claim, Huish is           defendants identify is legally irrelevant. The market
asserting its individual right as a consumer to purchase waste       participant exception does not come into play simply because
14     Huish Detergents v. Warren               No. 98-5566      No. 98-5566                Huish Detergents v. Warren        7
       County, Kentucky, et al.                                                                County, Kentucky, et al.

  expenditure of state resources) to favor their own             processing and disposal services across State boundaries, an
  citizens—is entirely absent where the States are buying        interest that falls squarely within the zone of interests
  and selling in the market.                                     protected by the Commerce Clause. The Clause protects not
                                                                 only producers, but also consumers like Huish who “‘may
College Sav. Bank v. Florida Prepaid Postsecondary Educ.         look to the free competition from every producing area in the
Expense Bd., 527 U.S. 666, ___, 119 S. Ct. 2219, 2230 (1999)     Nation to protect [it] from exploitation by any.’” Dennis v.
(citation omitted).                                              Higgins, 498 U.S. 439, 450 (1991) (quoting H.P. Hood &
                                                                 Sons, Inc. v. Du Mond, 336 U.S. 525, 539 (1949)).
     3. Huish’s Challenges to the Ordinance/Franchise
                         Scheme                                     The defendants rely on two cases from our sister circuits in
                                                                 arguing that Huish’s grievance does not satisfy the zone of
   To address Huish’s Commerce Clause claim, it is               interests test: Individuals for Responsible Government, Inc.
imperative that we properly characterize Huish’s challenges      v. Washoe County, 110 F.3d 699, 703 (9th Cir. 1997), and
to the ordinance/franchise scheme. We believe that the           Ben Oehrleins and Sons and Daughter, Inc. v. Hennepin
district court mischaracterized the challenged activities, and   County, 115 F.3d 1372, 1382 (8th Cir. 1997). Individuals for
this mischaracterization led to a mistaken analysis. The         Responsible Government involved a challenge to county
district court separated Huish’s challenges into two             ordinances that required all residents to purchase garbage
categories: (1) the County’s “takeover” of the private market    collection and disposal services from a company chosen by
for waste collection, processing, and disposal; and (2) the      the county. Unlike the ordinance and agreement in this case,
County’s award of an exclusive franchise to Monarch for          however, the challenged ordinances in Individuals for
collecting, processing, and disposing of municipal waste. As     Responsible Government permitted residential customers to
to (1), the court held that the County was not a market          opt out of the requirement and dispose of their own garbage,
participant and therefore not entitled to the market             without any restriction on the location of disposal. Residents
participation exception, but that its “takeover” of the waste-   who elected this self-help option were exempted from paying
services market in Bowling Green did not violate the             fees to the county-designated hauler, provided the residents
Commerce Clause. As to (2), the court held that the County       submitted appropriate documentation to the hauler.
was acting as a market participant in awarding an “exclusive     Individuals for Responsible Gov’t, 110 F.3d at 701. Three
franchise” to Monarch. Therefore, the court did not proceed      residents who apparently failed to submit the required
to consider whether this “franchise” violated the Commerce       documentation for the exemption sought a declaratory
Clause.                                                          judgment that the ordinances violated the dormant Commerce
                                                                 Clause. Id. at 701-02.
   The district court correctly observed that it must evaluate
each challenged activity separately, see USA Recycling, Inc.       The Ninth Circuit held that these residents did not satisfy
v. Town of Babylon, 66 F.3d 1272, 1283 (2d Cir. 1995), but       the “zone of interests” test. Id. at 704. The court observed
having said so, the court failed to do so. Specifically, by      that the ordinances did impose a barrier to interstate
grouping several challenged activities together under the        commerce by reducing the flow of garbage out of the state,
heading of a County “takeover,” the court overlooked the         but that the residents’ claimed injury—“being forced to pay
unique aspects of two provisions of the ordinance/franchise      for services they do not want”—would exist even if the
scheme: (1) the requirement that Monarch process all waste       ordinances imposed no barrier to interstate commerce because
8    Huish Detergents v. Warren                   No. 98-5566      No. 98-5566                 Huish Detergents v. Warren        13
     County, Kentucky, et al.                                                                     County, Kentucky, et al.

all garbage was disposed out-of-state. Id. at 703-04. But that     U.S. 204, 208 (1983). “There is no indication of a
is not the case here. Huish’s claimed injury—paying a higher       constitutional plan to limit the ability of the States themselves
cost for in-state waste processing and disposal—would              to operate freely in the free market.” Reeves, Inc. v. Stake,
disappear if it could hire a waste hauler to transport its waste   447 U.S. 429, 437 (1980). The market participation
out-of-state for processing and/or disposal. Thus, Individuals     exception applies equally to States and municipalities. See
for Responsible Government does not contradict our holding.        White, 460 U.S. 204. Consequently, if we determine that
                                                                   Warren County was acting as a market participant with regard
  In Ben Oehrleins, the county required all waste haulers to       to any of its challenged actions, we need not proceed to
deliver waste to a designated transfer station. The Eighth         consider whether the actions burdened interstate commerce in
Circuit held that residential waste generators who challenged      violation of the Commerce Clause. See id. at 210.
the ordinance failed to satisfy the zone of interests test. Ben
Oehrleins, 115 F.3d at 1381-82. Reasoning that the harm               The market participation inquiry is limited to “whether the
suffered by residential waste generators—having to pay             challenged program constitute[s] direct state participation in
relatively high bills for waste disposal—was “narrow,              the market.” Id. at 208 (internal quotation marks and citation
personal, and strictly local,” the court declared that “[l]ocal    omitted) (emphasis added). The Supreme Court has applied
consumers shouldering the end-line burden of a purely local        the market participation exception to the dormant component
regulation are not within the zone of interests of the             of the Commerce Clause only in cases where the State was
Commerce Clause.” Id. at 1382.                                     spending “its own funds,” see White, 460 U.S. at 214, Hughes
                                                                   v. Alexandria Scrap Corp., 426 U.S. 794 (1976), or selling a
  We find Ben Oehrleins to be distinguishable. The Ben             resource that it owned or produced, see Reeves, 447 U.S. 429.
Oehrleins waste generators did not allege a direct injury;         Of course, the State has no funds of “its own,” only funds it
rather, their “sole allegation of injury and claim for relief is   has exacted from taxpayers and holds in trust for all of its
that they have incurred increased costs because of                 citizens. The reference in these cases is to taxpayer funds in
enforcement of the designation requirements against                the hands of the State, or in this case, the County. White,
haulers.” Id. at 1379 n.6 (emphasis added). Huish—by               Hughes, and Reeves “stand for the proposition that, for
challenging the County’s restriction on Huish’s own ability to     purposes of analysis under the dormant Commerce Clause, a
purchase out-of-state waste processing or disposal                 State acting in its proprietary capacity as a purchaser or seller
services—claims an injury more directly implicating the            may ‘favor its own citizens over others.’”               Camps
interests under the Commerce Clause. Moreover, we disagree         Newfound/Owatonna, Inc. v. Town of Harrison, Maine, 520
with the Eighth Circuit’s reasoning, at least insofar as it        U.S. 564, 592-93 (1997) (quoting Hughes, 426 U.S. at 810)
applies to waste generators. As we have explained, waste           (emphasis added).
generators participate directly in commerce, and the
Commerce Clause guarantees to them access to the interstate          The Supreme Court recently observed that the market
market for waste-related services.                                 participation exception
  For these reasons, we hold that Huish has standing.                makes sense because the evil addressed by [the
Because the County does not challenge the district court’s           Commerce Clause]—the prospect that States will use
holding on Eleventh Amendment immunity, we do not                    custom duties, exclusionary trade regulations, and other
consider that issue here.                                            exercises of governmental power (as opposed to the
12    Huish Detergents v. Warren                   No. 98-5566      No. 98-5566                Huish Detergents v. Warren        9
      County, Kentucky, et al.                                                                    County, Kentucky, et al.

finance the transfer station, the town guaranteed a minimum                       B. RULE 12(b)(6) DISMISSAL
waste flow to the station and permitted the contractor to
charge a “tipping fee” to haulers depositing waste at the             We turn now to Huish’s claim that Warren County’s
station. The town chose the flow control ordinance as the           ordinance/franchise scheme violates the so-called “dormant”
mechanism for ensuring the minimum waste flow.                      Commerce Clause. Huish argues that it has adequately
                                                                    pleaded a valid Commerce Clause claim on three independent
   Carbone operated a recycling center of its own in                grounds: first, the scheme discriminates against out-of-state
Clarkstown, performing functions equivalent to those                waste processors by requiring that all municipal waste be
performed at the new transfer station. Carbone challenged the       processed at the Bowling Green transfer station; second, the
flow control ordinance on dormant Commerce Clause                   scheme discriminates against out-of-state waste disposers
grounds. In its defense, Clarkstown pointed to its need to          because it prohibits the disposal of Bowling Green waste
finance the transfer station. Id. at 386. The Court sided with      outside of Kentucky; and third, the scheme discriminates
Carbone. The Court explained that by preventing any                 against the interstate market for waste collection and
company “except the favored local operator” from processing         processing by designating Monarch, a local business, as the
waste generated in the town, the flow control ordinance             exclusive waste collector and processor for Bowling Green.
deprived out-of-state businesses of access to the local market.
Id. at 389. In other words, the offending ordinance “hoards            We review a Rule 12(b)(6) dismissal de novo. George
solid waste, and the demand to get rid of it, for the benefit of    Fischer Foundry Sys., Inc. v. Adolph H. Hottinger
the preferred processing facility.” Id. at 392. The Court held      Maschinenbau GmbH, 55 F.3d 1206, 1208 (6th Cir. 1995).
that the ordinance’s discrimination against out-of-state waste      Our duty is to construe the complaint in the light most
processors was per se invalid, rejecting Clarkstown’s               favorable to the plaintiff, accepting all well-pleaded factual
argument that it had no other means to advance its interest in      allegations as true. Columbia Natural Resources, Inc. v.
ensuring the long-term viability of the transfer facility. Id. at   Tatum, 58 F.3d 1101, 1109 (6th Cir. 1995). “[A] complaint
392-94.                                                             should not be dismissed unless it appears beyond doubt that
                                                                    the plaintiff can prove no set of facts in support of his claim
  The reach of the Commerce Clause into the waste industry          which would entitle him to relief.” Hartford Fire Ins. Co. v.
extends not only to waste processing, but also to waste             California, 509 U.S. 764, 811 (1993) (internal quotation
disposal. See Fort Gratiot, 504 U.S. 353; Chemical Waste            marks and citations omitted) (alteration in original).
Mgt., Inc. v. Hunt, 504 U.S. 334 (1992); City of Philadelphia,
437 U.S. 617. Carbone teaches us that a State cannot “hoard”                  1. The “Dormant” Commerce Clause
solid waste by prohibiting or restricting the flow of waste to
an out-of-state disposal facility.                                     The Commerce Clause grants Congress the power to
                                                                    regulate commerce among the States. It reads, with disarming
          2. The Market Participation Exception                     simplicity: “[The Congress shall have Power] [t]o regulate
                                                                    Commerce with foreign Nations, and among the several
   So-called dormant Commerce Clause principles are not             States, and with the Indian Tribes.” U.S. Const., art. I, § 8,
implicated when the State’s activity can be characterized as        cl.3. As interpreted by the Supreme Court, the Clause, by
“market participa[tion],” rather than market regulation. White      negative implication, restricts the States’ ability to regulate
v. Massachusetts Council of Constr. Employers, Inc., 460            interstate commerce. See CTS Corp. v. Dynamics Corp. of
10    Huish Detergents v. Warren                   No. 98-5566      No. 98-5566                 Huish Detergents v. Warren         11
      County, Kentucky, et al.                                                                     County, Kentucky, et al.

Am., 481 U.S. 69, 87 (1987). There is, of course, no                   As a preliminary matter, there is no question that a State
“dormant” clause to be found in the text of clause 3 of section     law restricting the interstate travel of waste implicates the
8 of article I. Clause 3 is the Commerce Clause; the judge-         Commerce Clause, and, as we have indicated, this is equally
made notion that a negative implication is subsumed in the          so of a local ordinance. Any doubt about this fact was laid to
affirmative declaration of clause 3 that Congress has power         rest by the Supreme Court in 1978. City of Philadelphia v.
“[t]o regulate Commerce . . . among the several States”             New Jersey, 437 U.S. 617, 621 (1978). Since then, the Court
should more properly be called the dormant aspect or                has reiterated that garbage is not valuable, in and of itself, but
component of the Commerce Clause. But it is too late in the         it is a “profitable business” because “its possessor must pay
day to rewrite the substantial case law that speaks, however        to get rid of it. In other words, the article of commerce is not
inaccurately, of “the dormant Commerce Clause.” Instead,            so much the solid waste itself, but rather the service of
we can only yield to this inaccurate but settled usage.             [collecting], processing and disposing of it.” Carbone, 511
U.S. at 390-91.
   The Supreme Court has interpreted the Commerce Clause
to “prohibit[] States from ‘advanc[ing] their own commercial          Whether the business arrangements between . . .
interests by curtailing the movement of articles of commerce,         generators of waste and the . . . operator of a waste
either into or out of the state.’” Fort Gratiot Sanitary              [processing or] disposal site are viewed as sales of
Landfill, Inc. v. Michigan Dep’t of Natural Resources, 504            garbage or purchases of transportation and disposal
U.S. 353, 359 (1992) (quoting H.P. Hood & Sons, 336 U.S.              services, the commercial transactions unquestionably
at 535). And this court, among others, has construed the              have an interstate character. The Commerce Clause thus
Clause as limiting the regulatory activity of counties and cities     imposes some constraints on [a State’s] ability to
as well as States. Waste Mgt., Inc. of Tennessee v.                   regulate these transactions.
Metropolitan Gov’t of Nashville and Davidson Cty., 130 F.3d
731, 735 (6th Cir. 1997), cert. denied, 523 U.S. 1094 (1998).       Fort Gratiot, 504 U.S. at 359 (internal quotation marks
Thus, where this opinion refers to “States,” the defendant,         omitted). Indeed, one of our sister circuits has observed that
Warren County, is included in this designation.                     federal courts are now clogged with cases challenging
                                                                    restrictions on waste-related services, making garbage the
  If an ordinance discriminates against interstate commerce         modern legal battleground over the Commerce Clause. See
by treating in-state and out-of-state interests differently,        SSC Corp. v. Town of Smithtown, 66 F.3d 502, 505 (2d Cir.
benefitting the former and burdening the latter, it is per se       1995).
invalid unless the State has “no other means to advance a
legitimate local interest.” Carbone, 511 U.S. at 392; see also         In Carbone, 511 U.S. 383, the Supreme Court held that a
Waste Mgt., 130 F.3d at 735. On the other hand, if the law          so-called flow control ordinance that required all solid waste
regulates evenhandedly, it will be upheld unless the burden it      in the town to be processed at a designated transfer station
imposes on interstate commerce is “‘clearly excessive in            before leaving the town violated the dormant Commerce
relation to the putative local benefits.’” Carbone, 511 U.S. at     Clause. The town of Clarkstown, New York, had agreed to
390 (quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142          close its landfill and build a new solid waste transfer station.
(1970)).                                                            Id. at 387. A local private contractor constructed the transfer
                                                                    station and agreed to operate it for five years, at which time
                                                                    the town would buy the station for a nominal price. Id. To