SDDS, Inc. v. State of S.D., 94-1688

• Decision Date: 06 February 1995
• Docket Number: No. 94-1688,94-1688
• Citation: 47 F.3d 263
• Parties: , 63 USLW 2499, 25 Envtl. L. Rep. 20,967 SDDS, INC., a South Dakota corporation, Appellant, v. STATE OF SOUTH DAKOTA; Mark W. Barnett, Attorney General of the State of South Dakota; Walter D. Miller, as Governor of the State of South Dakota; Joyce Hazeltine, Secretary of State of the State of South Dakota, Appellees, Action for the Environment, Intervenor Below.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 263

47 F.3d 263

40 ERC 1102, 63 USLW 2499, 25 Envtl.

L. Rep. 20,967

SDDS, INC., a South Dakota corporation, Appellant, v. STATE OF SOUTH DAKOTA; Mark W. Barnett, Attorney General of the State of South Dakota; Walter D. Miller, as Governor of the State of South Dakota; Joyce Hazeltine, Secretary of State of the State of South Dakota, Appellees Action for the Environment, Intervenor Below.

No. 94-1688.

United States Court of Appeals Eighth Circuit.

Submitted Nov. 15, 1994.

Decided Feb. 6, 1995.

Edward T. Lyons, Jr., Denver, CO. (David E. Driggers and Thomas J. Burke, Jr., on the brief), for appellant.

Roxanne Giedd, Asst. Atty. Gen., Pierre, SD (Diane Best, Asst. Atty. Gen., on the brief), for appellee.

Before MAGILL, Circuit Judge, JOHN R. GIBSON, Senior Circuit Judge, and BEAM, Circuit Judge.

MAGILL, Circuit Judge.

South Dakota Disposal Systems, Inc., (SDDS) appeals the district court's grant of summary judgment to the defendants, the State of South Dakota and various state officials (collectively, "South Dakota"), and its denial of SDDS's cross-motion for summary judgment. At issue in this Sec. 1983 suit is whether the referendum of a measure permitting SDDS to operate a large-scale municipal solid waste disposal (MSWD) facility in South Dakota violates the dormant commerce clause or SDDS's rights to due process and equal protection. Because we find that the referendum was the latest in a series of protectionist roadblocks erected by South Dakota, we hold that the referendum violates the dormant commerce clause. Accordingly, we reverse. ¹

I. BACKGROUND

This appeal is the latest in a seemingly never-ending series of cases arising from SDDS's six-year-long struggle to develop a large-scale MSWD facility near Edgemont, South Dakota. In November 1988, SDDS filed with the South Dakota Department of Water and Natural Resources (DWNR) ² an application for a permit to site, construct and operate a MSWD facility (the Lonetree facility). At the time, South Dakota's administrative permitting procedure for SWD facilities was to issue a one-year initial permit if the facility was determined to be environmentally safe and in the public interest, then to issue five-year renewals of that permit after de novo review of the safety of the facility. See S.D.Codified Laws Sec. 34A-6-1.16 (1986 & Supp.1989). After much judicial ³ and political ⁴ wrangling, the Board of Minerals and the Environment (BME), a branch of the DWNR, held a hearing on whether SDDS's application should be granted. The BME determined that the Lonetree facility was environmentally safe and in the public interest, as required by S.D.Codified Laws Sec. 34A-6-1.13 (1986 & Supp.1989), and issued the initial one-year permit on September 9, 1989. While the one-year permit was in effect, SDDS applied for a five-year renewal permit. The BME conducted additional hearings and issued the renewal permit in December 1990 based on independent findings that the Lonetree facility was safe and in the public interest.

SDDS's two permits have generated much litigation. In In re Application of SDDS, Inc., for a Solid Waste Permit, 472 N.W.2d 502 (S.D.1991) (SDDS I ), the South Dakota Supreme Court held that when the BME issued the original one-year permit, it did not make sufficient factual findings from which the court could determine whether the Lonetree facility was in the public interest. The court remanded for factual findings, ⁵ but did not address the merits of whether the facility was in fact in the public interest. 472 N.W.2d at 512. In In re 1990 Renewal Application of SDDS, Inc., 507 N.W.2d 702 (S.D.1993) (SDDS IV ), the South Dakota Supreme Court held that the renewal permit was void from its inception because the original one-year permit was found invalid in SDDS I. SDDS IV, 507 N.W.2d at 703-04.

Meanwhile, South Dakota voters addressed SDDS's attempt to develop the Lonetree facility by placing an initiative on the November 1990 ballot. This initiative required legislative approval of any large-scale SWD facility in addition to the administrative approval required of all SWD facilities regardless of size. Legislative approval was conditioned upon a finding that the facility was environmentally safe and in the public interest. Under South Dakota law, the Secretary of State is required to publish a pamphlet containing an Attorney General's explanation of, S.D.Codified Laws Sec. 12-13-9 (1982 & Supp.1994), and public comment on, S.D. Codified Laws Sec. 12-13-23 (1982 & Supp.1994), each initiated or referred measure. South Dakota stated at oral argument that this pamphlet is part of the legislative history of these initiated and referred measures. The Attorney General's explanation of the November 1990 initiative stated that it would apply retroactively to existing facilities (i.e., the Lonetree facility), and that only one facility (i.e., the Lonetree facility) would be affected. The initiative was passed in the November 1990 election, and is codified at S.D.Codified Laws Sec. 34A-6-53 to 56 (1992).

Shortly after the initiative was passed, the South Dakota legislature passed, and the governor signed, 1991 S.B. 169, codified at S.D.Codified Laws Sec. 34A-6-57 (1992), which gave the required legislative approval to the Lonetree facility. A referendum on S.B. 169 was certified on May 8, 1991. The Attorney General prepared an explanation of S.B. 169 and published arguments pro and con. The Attorney General's explanation states that the legislature found the facility to be environmentally safe and in the public interest and that the DWNR permits were "declared invalid in a court decision." The three-sentence "pro" statement mentions public support for the facility in the Edgemont area, the issuance of permits by the DWNR and the legislature, and the economic impact of the facility.

The "con" statement is the most significant part of the explanatory pamphlet in terms of length and impact. Because of the importance of this statement, we set it out at length:

Referred Law # 1 is a direct public vote on the Lonetree mega-garbage dump near Edgemont. South Dakota Disposal Systems, Inc. (SDDS), Lonetree's owner, has stated 95% of the waste will come from out-of-state. The Board of Minerals and Environment and the legislature gave SDDS approval to bring in 65 railroad cars of garbage per day, seven days per week.

ACTion for the Environment has referred that approval to a vote because South Dakota is not the nation's dumping grounds. A "NO" vote will prevent Lonetree from operating, and keep its imported garbage out of South Dakota.

The U.S. Environmental Protection Agency has stated that all landfills eventually deteriorate, and new technologies only delay leaks further into the future (Federal Register, August 30, 1988). NIMBY (not in my backyard) exists because people do not want their soil, air and water contaminated.

....

... Lonetree is not an option for South Dakota communities. It is an out-of-state dump.

To the extent we become the nation's dumping grounds, we undermine successful recycling efforts elsewhere. Vote "NO" on Lonetree.

Appellant's Add. at 38. In November 1992, the referred measure was defeated, effectively vetoing the Lonetree facility. ⁶ SDDS, Inc. v. South Dakota, 994 F.2d 486, 489 (8th Cir.1993) (SDDS V ).

These legislative activities spawned several additional lawsuits. SDDS challenged the initiative that required dual legislative and administrative approval. In SDDS, Inc. v. State, Civ. Case No. 90-412 (S.D. 6th Cir.Ct. Oct. 31, 1991) (SDDS III ), South Dakota state judge Steven L. Zinter upheld the initiative against several attacks virtually identical to those now mounted against the referendum. Judge Zinter's decision in SDDS III was not appealed.

All these events bring us to the procedural history of this case in the federal courts. This appeal is the second time we have encountered the referendum. In SDDS V, we reversed the district court's grant of summary judgment for South Dakota and remanded the case for further proceedings. The issue resolved in SDDS V was whether Judge Zinter's decision concerning the legality of the initiative (SDDS III ) precluded litigation of the legality of the referendum (SDDS V ) under the doctrine of collateral estoppel. We held that it did not. On remand, the district court granted summary judgment for South Dakota a second time, holding that there was no due process violation because SDDS had no affected property interest, no commerce clause violation and no equal protection violation. 843 F.Supp. 546, 562 (D.S.D.1994). SDDS's cross-motion for summary judgment was denied. This appeal followed.

II. DISCUSSION

A. The General Framework: Varying Levels of Scrutiny

The Supreme Court has established a two-step approach to the dormant commerce clause. The first step requires us to determine whether a challenged state measure discriminates against out-of-state articles (i.e., is a protectionist measure). Discrimination may take one of three forms. See Chemical Waste Mgmt. v. Hunt, 504 U.S. 334, ---- n. 6, 112 S.Ct. 2009, 2015 n. 6, 119 L.Ed.2d 121 (1992) (noting three types of discrimination); Southern States Landfill v. Georgia DNR, 801 F.Supp. 725, 730-31 (M.D.Ga.1992) (finding statute discriminatory on its face, in purpose and in effect); Waste Recycling v. Southeast Ala. Solid Waste Disposal, 814 F.Supp. 1566 (M.D.Ala.1993), affirmed, 29 F.3d 641 (11th Cir.1994). First, a measure may facially discriminate against out-of-state articles. See, e.g., Philadelphia v. New Jersey, 437 U.S. 617, 98 S.Ct. 2531, 57 L.Ed.2d 475 (1978) (facial discrimination where state statute prohibited importation of waste "which originated or was collected outside the territorial limits of the State"); Hughes v. Oklahoma, 441 U.S. 322, 336-37, 99 S.Ct. 1727, 1736-37, 60 L.Ed.2d 250 (1979) (facial discrimination where state statute provided that no one "may ship or transport minnows for sale into this state...