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Dirty Boyz Sanitation Service, Inc. v. City of Rawlins, Wyoming

United States Court of Appeals, Tenth Circuit

May 14, 2018

DIRTY BOYZ SANITATION SERVICE, INC., Plaintiff - Appellant,
v.
CITY OF RAWLINS, WYOMING, Defendant-Appellee.

          Appeal from the United States District Court for the District of Wyoming (D.C. No. 2:16-CV-00005-NDF)

          James B. Harris, Thompson & Knight LLP, Dallas, Texas (Stephen F. Fink, Thompson & Knight LLP, Dallas, Texas, and Bruce T. Moats, Law Office of Bruce T. Moats, P.C., Cheyenne, Wyoming, with him on the briefs) for Plaintiff-Appellant.

          Richard Rideout, Law Offices of Richard Rideout, PC, Cheyenne, Wyoming, for Defendant-Appellee.

          Before LUCERO, O'BRIEN, and PHILLIPS, Circuit Judges.

          PHILLIPS, CIRCUIT JUDGE.

         This case concerns an agreement between the City of Rawlins, Wyoming (Rawlins), and Dirty Boyz Sanitation Services (Dirty Boyz) for local garbage collection and disposal. About two years after the parties executed the agreement, the State of Wyoming required Rawlins to close its landfill. Soon after, Rawlins opened a transfer station to process garbage for transport to a landfill elsewhere. Later, Rawlins adopted a flow-control ordinance requiring that all locally licensed garbage haulers take collected garbage to Rawlins's transfer station. Rawlins, Wyo., Code § 8.08.030 (2016). Dirty Boyz argues that the ordinance violates the Contract Clause of the United States Constitution, U.S. Const. art. I, § 10, cl. 1, and is preempted by the Federal Aviation Administration and Authorization Act (FAAAA), 49 U.S.C. § 14501(c)(1) (2016). The district court granted summary judgment in favor of Rawlins. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

         BACKGROUND

         Dirty Boyz is a Wyoming corporation that operates a garbage-collection business in Rawlins, Wyoming. In December 2008, Dirty Boyz and Rawlins entered an agreement for the collection and disposal of local garbage (that is, garbage collected in the city).[1] By the agreement, Rawlins granted Dirty Boyz a non-exclusive license to collect and dispose of local garbage. The agreement recognized that Rawlins could grant licenses to other garbage haulers, [2] and it included a "reservation by the City to collect and dispose of Garbage in the City if the City deems it necessary." Appellant's App. vol. 1 at 19. Initially, Dirty Boyz claims it disposed of the local garbage at Rawlins's landfill.

         In June 2010, things changed when the operating permit for Rawlins's landfill expired. Rather than renew the permit, the Wyoming Department of Environmental Quality and Rawlins agreed to close and seal the landfill.[3] In December 2010, no longer able to accept garbage at its landfill, Rawlins entered an agreement with the City of Casper, Wyoming to use its landfill.[4] Then Rawlins expanded the facilities at its landfill to function as a transfer station to process garbage for transport to Casper. And in 2011, Rawlins began transporting garbage to Casper's landfill. In May 2012, the Rawlins City Council considered enacting a proposed flow-control ordinance, [5] requiring haulers to convey local garbage to Rawlins's transfer station. But the ordinance quickly failed.

         Aware of the problem with Rawlins's landfill, Dirty Boyz experimented with hauling garbage to landfills in Rock Springs, Wyoming, and Larimer County, Colorado. In February 2014, Dirty Boyz sought approval from the Carbon County Planning Commission and the Wyoming Department of Environmental Quality for the required permits to construct its own transfer station. Dirty Boyz decided to build its own transfer station so it could more cost-effectively collect and dispose of garbage. Rawlins charged a fee per ton of garbage conveyed to its transfer station. Once the garbage was received at Rawlins's transfer station, Rawlins processed the garbage, paid a contractor to transport it to Casper's landfill, and paid Casper a fee to use its landfill. The landfills in Rock Springs and Larimer County charged lower fees for disposal of garbage than Rawlins charged at its transfer station. Despite higher labor and fuel costs, it was more affordable for Dirty Boyz to transport garbage to Rock Springs or Larimer County than it was for Dirty Boyz to pay the fee charged at Rawlins's transfer station. Dirty Boyz planned to compact garbage at its transfer station and haul the garbage by semi-truck to a landfill in Larimer County. Because Larimer County's landfill charged by volume, not weight, compacting the garbage at its transfer station allowed Dirty Boyz to save additional money on disposal fees.

         When Dirty Boyz applied for a permit to construct its own transfer station, it did so knowing of Rawlins's previous efforts to enact a flow-control ordinance. As mentioned, the earlier-proposed flow-control ordinance would have prohibited Dirty Boyz from using its own transfer station. In September 2014, the Rawlins city planner sent a letter to the Carbon County Planning Commission objecting to the permit for Dirty Boyz's transfer station because Rawlins's population could not support more than one transfer station. But in April 2015, Carbon County and the Wyoming Department of Environmental Quality approved the permit.

         The formal process of closing the landfill didn't start until years after the landfill stopped receiving garbage. In October 2015, the state awarded Rawlins a grant of $3, 651, 200 and a no-interest loan of $1, 238, 800 to help pay the closure costs. But the state required Rawlins to self-fund the remaining cost of the project, about $1.6 million. To repay these amounts, Rawlins planned to use revenue from the fee it charged for garbage received at its transfer station.

         Later in October 2015, Dirty Boyz obtained private financing to build its own transfer station. Dirty Boyz also asked Rawlins to endorse its application for a small business grant from the State Small Business Credit Initiative. To receive a grant under the program Dirty Boyz needed a statement from Rawlins that Dirty Boyz's transfer station would provide an economic benefit to the city. On November 3, 2015, the city council voted against endorsing Dirty Boyz's grant because Dirty Boyz's transfer station would reduce the amount of garbage taken to Rawlins's transfer station and decrease the amount of revenue raised from the transfer-station fee.

         On November 10, 2015, Rawlins sent Dirty Boyz a letter advising that it might amend the agreement to require that Dirty Boyz take all local garbage to Rawlins's transfer station. The letter explained that Rawlins was working with the Wyoming Department of Environmental Quality to close and cap the city's landfill. And the letter expressed Rawlins's "desire" to withdraw any flow-control requirement after repaying amounts incurred in closing the landfill. Appellant's App. vol. 2 at 114.

         In January 2016, the Rawlins City Council indeed enacted a flow-control ordinance. The ordinance requires all garbage "generated and/or accumulated and/or collected" in the city to be taken to Rawlins's transfer station. Rawlins, Wyo., Code § 8.08.030. One of Dirty Boyz's owners, Patrick Cain, participated in the city-council meetings leading up to the passage of the ordinance and objected to the flow-control requirement. A week after enactment, Rawlins sent Dirty Boyz notice of the ordinance, advising it that the Rawlins City Attorney's Office would soon seek an amendment to the agreement "that fully conforms to the newly enacted regulations." Appellant's App. vol. 2 at 115.

         That same day, Dirty Boyz sued Rawlins in federal district court, alleging, among other things, that the ordinance violates the Contract Clause of the United States Constitution and is preempted by the FAAAA.[6] Three months later, in April 2016, Dirty Boyz completed construction of its transfer station. Because Dirty Boyz completed construction after Rawlins enacted the flow-control ordinance, Dirty Boyz never used its own transfer station to process garbage collected in the city. But Dirty ...


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