Court Opinion

ID: 2965467
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:40:48.564173+00
Date Added: 2024-06-11T15:02:17.736357
License: Public Domain

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<pre>                  United States Court of Appeals <br>                      For the First Circuit <br>                       ____________________ <br> <br>No. 97-2347 <br> <br>                  USED TIRE INTERNATIONAL, INC., <br> <br>                      Plaintiff, Appellant, <br> <br>                                v. <br> <br>                       MANUEL DIAZ-SALDAA, <br> <br>                       Defendant, Appellee. <br> <br>                       ____________________ <br> <br>No. 97-2348 <br> <br>                  USED TIRE INTERNATIONAL, INC., <br> <br>                       Plaintiff, Appellee, <br> <br>                                v. <br> <br>                       MANUEL DIAZ-SALDAA, <br> <br>                      Defendant, Appellant. <br> <br>                       ____________________ <br> <br>          APPEALS FROM THE UNITED STATES DISTRICT COURT <br> <br>                 FOR THE DISTRICT OF PUERTO RICO <br> <br>        [Hon. Juan M. Prez-Gimnez, U.S. District Judge] <br> <br>                       ____________________ <br> <br>                              Before <br> <br>                Selya and Boudin, Circuit Judges, <br> <br>and Schwarzer, Senior District Judge. <br> <br>                      _____________________ <br> <br>     Sylvia Roger-Stefani, Assistant Solicitor General, with whom <br>Carlos Lugo-Fiol, Solicitor General, and Edda Serrano-Blasini, <br>Deputy Solicitor General, Federal Litigation Division, Puerto Rico <br>Department of Justice, were on brief, for appellant. <br>     Joan S. Peters, with whom Andrs Guillemard-Noble and Nachman, <br>Guillemard & Rebollo were on brief, for appellee. <br> <br> <br>                       ____________________ <br> <br>                       September 11, 1998 <br>                      ____________________

          SCHWARZER, Senior District Judge.  In an effort to attack <br>the mounting problem of solid waste disposal, the Puerto Rico <br>legislature in 1996 enacted the Tire Handling Act, also known as <br>Law 171.  This act establishes a comprehensive scheme for the <br>handling and disposal of used tires.  Among other things, it <br>requires tire vendors to accept customers' used tires at no extra <br>charge for processing or disposal, prohibits the burning of tires <br>and depositing of tires in landfills except under certain <br>conditions, regulates the storage and recycling of tires, <br>establishes import fees, sets up a fund for handling scrap tires, <br>creates incentives for recycling and developing alternative uses <br>for scrap tires, and imposes penalties for noncompliance with its <br>provisions.  The legislature identified the disposal of tires as a <br>particular problem because of the fire hazard they present, the <br>public health hazard they create from disease-carrying mosquitoes <br>breeding in water that accumulates inside discarded tires and the <br>large amount of space they occupy, diminishing the useful life of <br>landfills. <br>          Used Tire International, Inc. ("UTI") is an importer of <br>used tires into Puerto Rico.  It brought this action for <br>declaratory and injunctive relief against appellant Manuel Daz- <br>Saldaa as Secretary of the Treasury to bar enforcement of certain <br>provisions of Law 171.  Those provisions are:  Article 5(B) which <br>prohibits the import of tires that do not have a minimum tread <br>depth of 3/32"; Article 5(D) which requires tire importers to file <br>a bond in an amount equivalent to the cost of handling and <br>disposing of the imported product and provides for execution of the <br>bond in the event that 10% of a representative sample of a shipment <br>does not qualify; Article 6 which imposes a charge on all imported <br>tires; Article 17(A)(1) which provides for distributions from a <br>tire handling fund, created from the charge imposed on importers of <br>tires, to recyclers, processors and exporters of tires; and Article <br>19(A) which imposes a $10.00 fine on persons selling or importing <br>tires that do not have a minimum tread depth of 3/32."  Following <br>a hearing on UTI's request for a preliminary injunction at which <br>both sides presented testimony, the district court issued an <br>opinion and order, granting the injunction against enforcement of <br>Articles 5(B), 5(D) and 19(A) and denying it with respect to <br>Articles 6 and 17(A)(1).  Puerto Rico appealed the order and UTI <br>cross-appealed.  The parties have stipulated that we may treat <br>Puerto Rico's appeal as being from a final adjudication of the <br>invalidity of Articles 5(B), 5(D) and 19(A).  We have jurisdiction <br>under 28 U.S.C.  1331 and 1292(a)(1). <br>                      PUERTO RICO'S APPEAL  <br>          The district court concluded that Articles 5(B) and 19(A) <br>facially discriminate against interstate commerce by banning the <br>importation of a class of tires that may be legally sold and used <br>in Puerto Rico.  In reaching that conclusion it rejected the <br>Secretary's argument that Law 171 is non-discriminatory because the <br>3/32" requirement applies equally to importers and sellers of used <br>tires.  The argument was premised on the first sentence of Article <br>19(A) which states: <br>            Every person who sells or imports tires <br>            . . . that do not have a minimum depth of <br>            3/32" . . . shall pay a fine of $10.00 per <br>            tire. <br> <br>The court rejected this interpretation of the statute as <br>implausible on the strength of the second sentence of Article 19(A) <br>which states: <br>            This provision shall apply to those who <br>            fail to comply but have not had their bond <br>            executed, according to what is pointed out <br>            in Article 5(D) [which requires all tire <br>            importers to post a bond]. <br> <br>It read that provision as making the penalty applicable only to <br>those who have filed bonds, i.e., importers of used tires.   <br>          We agree with the district court's interpretation.  The <br>reference to "those . . . who have not had their bond executed" and <br>the cross-reference to Article 5(D) dealing with importers of used <br>tires makes it clear that only those sellers of used tires who are <br>also importers are the subject of Article 19(A).  Moreover, as UTI <br>points out, it would make little sense for the legislature to <br>penalize sellers of noncomplying used tires taken in trade-in <br>(i.e., locally-generated used tires) for to do so would simply <br>accelerate the time when used tires are discarded as scrap and <br>dumped in a landfill.  On appeal, the Secretary merely reiterates <br>that the penalty applies equally to sellers and to importers but <br>has offered "only rhetoric, and not explanation."  See Chemical <br>Waste Management, Inc. v. Hunt, 504 U.S. 334, 343 (1992).  We <br>conclude, therefore, that Article 19(A) discriminates against <br>sellers of imported used tires because only they and not sellers of <br>locally-generated used tires are subjected to the penalty and, <br>consequently,  that Article 5(B) discriminates against importers of <br>used tires because Law 171 singles them out in barring the import <br>of tires with less than 3/32" tread depth. <br>     The district court, having concluded that Articles 5(B) <br>and 19(A) are invalid, did not reach the bonding requirement under <br>Article 5(D).  That article provides that "[e]very tire importer <br>shall file . . .  a bond . . . equivalent to the total cost of the <br>handling and disposal of the imported product.  Should more than <br>10% of a representative sample of a shipment of imported tires <br>fail[] to meet [the 3/32" standard] . . . the totality of the bond <br>shall be executed."  Plainly the bonding requirement imposes <br>burdens, costs and risks on importers of used tires not borne by <br>sellers of locally-generated used tires and thus provides added <br>support for the conclusion that Articles 5(B), 5(D) and 19(A) <br>together facially discriminate against interstate commerce. <br>     The inexorable increase in the volume of solid wastes and <br>the health and environmental consequences attendant on their <br>disposal present legislatures and courts with vexing problems.  SeePhiladelphia v. New Jersey, 437 U.S. 617, 630 (1978) (Rehnquist, <br>J., dissenting).  We may assume that Puerto Rico's purpose in <br>enacting Law 171 was to serve the best interests of all its <br>citizens.  But no matter how laudatory its purpose, "it may not be <br>accomplished by discriminating against articles of commerce coming <br>from outside the [Commonwealth] unless there is some reason, apart <br>from their origin, to treat them differently."  Id. at 626-27.  In <br>Philadelphia, the Supreme Court struck down a New Jersey statute <br>that prohibited the importation of waste originating out of state.  <br>The crucial question, the Court said, was whether the statute was <br>"basically a protectionist measure, or whether it can fairly be <br>viewed as a law directed to legitimate local concerns, with effects <br>upon interstate commerce that are only incidental."  Id. at 624.  <br>To answer that question, the Court saw no need to resolve the <br>dispute between the parties whether the purpose was to serve <br>parochial economic interests or to save the environment for "the <br>evil of protectionism can reside in legislative means as well as <br>legislative ends."  Id. at 626.  New Jersey's law, it held, fell <br>within the area that the Commerce Clause puts off limits to state <br>regulation because it "imposes on out-of-state commercial interests <br>the full burden of conserving the State's remaining landfill <br>space."  Id. at 628. <br>     Puerto Rico's legislation barring the importation of <br>certain used tires is essentially indistinguishable from New <br>Jersey's.  It, too, places the burden of conserving its landfill <br>space on those engaged in interstate commerce, the importers of <br>used tires.  And it is essentially indistinguishable from the <br>Alabama statute imposing an additional disposal fee on wastes <br>generated outside the state, struck down in Chemical Waste.  Seealso Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dept. of <br>Natural Resources, 504 U.S. 353 (1992) (striking down statute <br>barring disposal of solid waste generated in another county); <br>Trailer Marine Transp. Corp. v. Rivera Vzquez, 977 F.2d 1, 10 (1st <br>Cir. 1992).  The costs associated with the required bond and the <br>penalty upon the sale of noncomplying imported tires, moreover, <br>resemble a tariff on goods that may be lawfully sold in the state <br>because they are imported from another state, "[t]he paradigmatic <br>example of a law discriminating against interstate commerce."  West <br>Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 193 (1994).  Because <br>the Secretary has failed to come forward with a showing that <br>Articles 5(B), 5(D) and 19(A) advance a legitimate local purpose <br>that cannot be adequately served by reasonable nondiscriminatory <br>alternatives, see New Energy Co. v. Limbach, 486 U.S. 269, 278 <br>(1988), they cannot withstand scrutiny under the Commerce Clause. <br>                        UTI'S CROSS-APPEAL <br>     UTI cross-appeals from the district court's denial of <br>injunctive relief against enforcement of Articles 6 and 17.  We <br>review the denial of a preliminary injunction for abuse of <br>discretion.  See Ross-Simons of Warwick, Inc. v. Baccarat, Inc., <br>102 F.3d 12, 16 (1st Cir. 1996).  The appealing party "bears the <br>considerable burden of demonstrating that the District Court <br>flouted" the four-part test for preliminary injunctive relief.  <br>E.E.O.C. v. Astra USA, Inc., 94 F.3d 738, 743 (1st Cir. 1996).  <br>That test requires plaintiff to show probability of success on the <br>merits as well as irreparable injury, the balance of harm tipping <br>in plaintiff's favor, and absence of adverse effect on the public <br>interest.  See, e.g., Starlight Sugar, Inc. v. Soto, 114 F.3d 330, <br>331 (1st Cir. 1997). <br>     Article 6 imposes a charge on each imported tire, whether <br>new or used, varying with the dimension of the wheel rim.  The <br>revenue received from this charge is placed in an Adequate Disposal <br>Tire Handling Fund, created under Article 17, to subsidize the cost <br>of processing and recycling used tires.  The district court held <br>that Article 6 does not discriminate against interstate commerce <br>because the charge is imposed on all tires entering Puerto Rico, no <br>tires being manufactured in Puerto Rico.  See Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 125 (1978).   UTI argues that <br>the charge discriminates because it is not imposed on locally- <br>generated tires.  Those tires, of course, pay the charge when they <br>enter Puerto Rico as new tires.  The district court found that <br>those tires nevertheless enjoy an economic advantage because the <br>charge is not passed on in the price of locally-generated used <br>tires.  Whatever the basis for that finding, we find nothing <br>discriminatory in a one-time charge imposed on the importation of <br>every tire, new or used.  The only used tires that may enjoy an <br>advantage are those that were imported new or used before Law 171 <br>became effective (some of which were presumably imported by UTI).  <br>But their advantage is temporary and is the result, not of <br>discrimination, but, rather, of the inevitable phasing in of the <br>new law.  Because we find that Article 6 "regulates evenhandedly to <br>effectuate a legitimate local public interest, and its effects on <br>interstate commerce are only incidental," Pike v. Bruce Church, 397 <br>U.S. 137, 142 (1970), we affirm the district court's ruling denying <br>injunctive relief. <br>     Article 17(A)(1) provides for the distribution out of the <br>Adequate Disposal Tire Handling Fund of the revenue derived from <br>the import charge.  Out of the revenue collected, handlers of tires <br>to be processed or recycled in Puerto Rico are to receive a maximum <br>of 91% of the handling and disposal fee and exporters up to 46%.  <br>UTI contends that this provision facially discriminates against <br>tire exporters.  The district court found, and it is not disputed, <br>that UTI is not a scrap tire exporter and thus not hurt by the law.  <br>Accordingly, it lacks standing to attack this article.  See Lujanv. Defenders of Wildlife, 504 U.S. 555, 560-61 (1994). <br>     UTI seeks to avoid its disability by arguing that Article <br>17 together with Article 6 create a tax-subsidy program similar to <br>that found to be invalid in West Lynn Creamery, Inc. v. Healy, 512 <br>U.S. 186 (1994).  West Lynn struck down a Massachusetts milk <br>pricing order which imposed an assessment on all milk sold by <br>dealers in Massachusetts, two-thirds of which came from out of <br>state, and then distributed all of it to Massachusetts dairy <br>farmers.  Even though the assessment and the subsidy, separately, <br>could be lawfully enacted, together they constituted a scheme under <br>which out-of-state producers were required to subsidize competition <br>by local high cost dairy farmers, neutralizing advantages possessed <br>by lower cost out-of-state producers.  Id. at 194.  The Puerto Rico <br>import charge is distinguishable because it does not subsidize <br>local dealers at the expense of those engaged in interstate <br>commerce. <br>                            CONCLUSION <br>     We therefore AFFIRM the district court's order respecting <br>injunctive relief.</pre>

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