Appendix — South Dakota v. SDDS, Inc.

la

United States Court of Appeals,

Eighth Circuit.

In re: SDDS, INC., a South Dakota,

Corporation, Petitioner.

SDDS, Inc., Appellee/Cross-appellant,

V.

State of South Dakota, Appellant/Cross-appellee.

Mark W. Barnett, Attorney General of the State of

South Dakota; Joyce Hazeltine, Secretary of State

of South Dakota; George S. Mickelson,

Governor of the State of South

Dakota, Defendants.

Action for the Environment,

Intervenor Defendant.

Nos. 98-3588, 99-1024, 99-1035.

Submitted: May 8, 2000.

Filed: Sept. 15, 2000.

Before McMILLIAN, JOHN R. GIBSON and BEAM,

Circuit Judges.

McMILLIAN, Circuit Judge.

This matter began in 1991 with a complaint filed in the

United States District Court for the District of South Dakota by

SDDS, Inc. (SDDS), against the State of South Dakota (the

State), seeking declaratory and injunctive relief pursuant to 42

U.S.C. § 1983. Since then, the case has come before this court

on three separate occasions, see SDDS, Inc. v. State of South

Dakota, 994 F.2d 486 (8th Cir. 1993) (SDDS III); id., 47 F.3d

263 (8th Cir. 1995) (SDDS VI); id, 97 F.3d 1030 (8th Cir.

1996) (SDDS VIID), and related litigation has been ongoing in

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the South Dakota state courts. Now, on this fourth visit to the

Eighth Circuit, the parties present us with the following: (1) an

appeal by the State from the district court order denying the

State’s motion pursuant to Fed. R. Civ. P. 60(b) to set aside

prior federal court judgments; (2) an appeal by the State and

cross-appeal by SDDS from an order of the district court

awarding SDDS attorneys’ fees and costs; and (3) a petition to

recall, clarify, and supplement the mandate issued pursuant to

our decision in SDDS VIII. For reasons stated below, we affirm

the orders of the district court,’ and we deny SDDS’s petition

to recall the mandate.

The background facts have been stated in our prior

opinions. See SDDS VIII, 97 F.3d at 1032-34. Briefly

summarized, this litigation arises out of an unsuccessful effort

by SDDS to construct and operate a multistate solid waste

disposal (MSWD) facility near Edgemont, South Dakota.

Opposition to the MSWD facility prompted, among other

things, two ballot initiatives. The second ballot initiative, or

referendum, effectively ended SDDS’s plan to develop the

MSWD facility. See id. at 1033 (“The electorate vetoed the

MSWD facility, which ‘shut down’ SDDS’s MSWD site.”).

SDDS brought the present § 1983 action against the State and

numerous state officials (collectively the defendants) in federal

district court alleging that the second ballot initiative violated

the dormant commerce clause. SDDS also filed an action

against the defendants in South Dakota state court to recover

just compensation for an alleged de facto “taking,” or inverse

condemnation, of its property by way of the referendum.

For nearly ten years, the two cases — one in federal court,

the other in state court — followed long, convoluted, and

intertwined procedural journeys. Along the way, we twice

reversed summary judgment dispositions by the district court

in favor of the defendants. See SDDS III, 994 F.2d at 494;

' The Honorable Richard H. Battey, Chief Judge, United

States District Court for the District of South Dakota.

1 ee

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SDDS VI, 47 F.3d at 272. Consistent with our decision in

SDDS VI, the district court, on April 24, 1995, entered

judgment in favor of SDDS and against the defendants,

declaring that the second ballot initiative violated the dormant

commerce clause and assessing costs to the defendants. In F.3d

at 1041-42, SDDS VIII, 97 we instructed the district court to

enter an order enjoining the defendants from relitigating certain

specified issues in the state court proceedings. After the

mandate for SDDS VIII issued on November 15, 1996, the

district court issued the required injunction on December 12,

1996. The South Dakota Supreme Court held that the state

courts were bound by the district court’s order granting the

defendants injunctive relief. notwithstanding its disagreement

with that order on the merits, and, on May 18, 1998, the United

States Supreme Court denied the defendants’ resulting petition

for a writ of certiorari. See SDDS, Inc. v. State, 569 N.W.2d

289, 293-95 & n.9 (S.D. 1997) (SDDS IX), cert. denied, 523

U.S. 1118, 118 S. Ct. 1796, 140 L.Ed.2d 937 (1998) (SDDS X).

On June 9, 1998, the State moved pursuant to Fed. R. Civ.

P. 60(b)(4) to set aside the district court’s judgments of April

24, 1995, and December 12, 1996, on the ground that those

prior final decisions were void because they were entered in

violation of the Eleventh Amendment. On August 24, 1998,

the district court denied the State’s Fed. R. Civ. P. 60(b)

motion.See SDDS v. State of South Dakota, No. CIV. 91-5121

(D.S.D. Aug. 24, 1998). SDDS then moved in the district court

for attorneys’ fees and costs incurred in opposing the State’s

Fed. R. Civ. P. 60(b) motion, and the State opposed SDDS’s

request. On November 6, 1998, the district court awarded

SDDS attorneys’ fees and costs, but not the full amount of

attorneys’ fees requested. See SDDS v. State of South Dakota,

No. CIV. 91-5121 (Nov. 6, 1998).

Appeal No. 98-3588

The State appeals from the district court’s order of August

24, 1998, denying the State’s Fed. R. Civ. P. 60(b)

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motion.Upon careful review, we hold that the district court did

not err in denying the State relief pursuant to Fed. R. Civ. P.

60(b)(4) because the State did not seek review, by petition for

writ of certiorari, of either SDDS VI or SDDS VIII and instead

has attempted to collaterally attack those final decisions by way

of a Rule 60(b) motion in the district court. Just as a Rule 60(b)

motion cannot be used to relitigate the merits of a district

court’s prior judgment in lieu of a timely appeal, nor can it be

used to collaterally attack a final court of appeals’ ruling in lieu

of a proper petition for review in the United States Supreme

Court. Cf. Kocher v. Dow Chemical Co., 132 F.3d 1225, 1229

(8th Cir. 1997) (“A party may not use a Rule 60(b)(4) motion

as a substitute for a timely appeal. In other words, if a party

fails to appeal an adverse judgment and then files a Rule

60(b)(4) motion after the time permitted for an ordinary appeal

has expired, the motion will not succeed merely because the

same argument would have succeeded on appeal.”). Moreover,

while the Eleventh Amendment provides the State with a

defense, it does not automatically deprive the federal courts of

original jurisdiction.See Wisconsin Dep't of Corrections v.

Schacht, 524 U.S. 381, 389, 118 S. Ct. 2047, 141 L.Ed.2d 364

(1998) (“The Eleventh Amendment ... does not automatically

destroy original jurisdiction.Rather, the Eleventh Amendment

grants the State a legal power to assert a sovereign immunity

defense should it choose to do so. The State can waive the

defense.”). As in the present case, “[a] state may ... waive its

Eleventh Amendment immunity through its conduct. Courts

have inferred a waiver when the State has made a general

appearance in federal court and defended a lawsuit on the

merits.” Hankins v. Finnel, 964 F.2d 853, 856 (8th Cir.)

(citations omitted), cert. denied, 506 U.S. 1013, 113 S. Ct. 635,

121 L.Ed.2d 566 (1992). In the present case, the State for many

years actively and vigorously litigated the merits of SDDS’s

claims in federal court, never once raising an Eleventh

Amendment immunity defense until after the mandates had

been issued and our decisions in SDDS VI and SDDS VIII were

final. In light of the State’s conduct, it would appear that the

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State has waived any sovereign immunity defense it may have

had to the claims addressed in SDDS V/ and SDDS VIII. The

district court’s order of August 24, 1998, is affirmed.

Cross-appeals Nos. 99-1034/1035

The State also appeals the district court’s November 6,

1998, award of attorneys’ fees and costs, again relying on the

argument that the underlying judgments were void on Eleventh

Amendment grounds. SDDS cross-appeals, arguing that the

district court abused its discretion in failing to award the full

amount of attorneys’ fees requested.

Upon review, we note that the State’s appeal from the

award of attorneys’ fees and costs assumes success on its

appeal from the district court’s August 24, 1998, decision,

involving the merits of the State’s belated Eleventh

Amendment defense. Having affirmed the August 24, 1998,

order, we find no basis for reversing the district court’s decision

to award SDDS attorneys’ fees and costs. (It would, of course,

defy logic to permit the State to invoke its Eleventh

Amendment argument to now preclude SDDS from recovering

attorneys’ fees and costs which were incurred in defeating that

very argument.)

Furthermore, on careful review of the district court’s

determination of SDDS’s reasonable attorneys’ fees, we hold

that the district court did not abuse its discretion in declining to

award SDDS’s entire request. The district court’s order of

November 6, 1998, is affirmed.

Petition to recall the mandate

In the spring of 1999, the inverse condemnation case in

South Dakota state court proceeded to trial before a jury. on the

issue of SDDS’s damages. On April 6, 1999, the jury found

that SDDS’s damages amounted to $10.1 million.The State

moved for judgment notwithstanding the verdict (INOV) or a

new trial, and, on January 6, 2000, the state trial court held a

hearing on the motion.Ruling from the bench, the state trial

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court denied the State’s motion for JNOV but granted a new

trial on the basis of instructional error. Thereafter, on February

23, 2000, SDDS challenged that ruling by filing a petition in

this court requesting that we recall, clarify, and supplement our

mandate in SDDS VIII. In essence, SDDS argues that the state

trial court has misconstrued the federal injunction, and we

should therefore reopen and revise our earlier decision in order

to compel a different ruling by the state court. SDDS describes

the relief it seeks as follows: “This would necessarily consist

[of] an additional direction to the district court to enjoin the

Defendants and the state trial court from relitigating any of

those issues expressly and by necessary implication decided by

this Court in SDDS VI or SDDS VIII.” SDDS’s Petition to

Recall, Clarify and Supplement Mandate at 12 (emphasis

added). In SDDS VIIII, we directed the district court to enjoin

the defendants, not the state courts, from relitigating certain

issues. The district court complied with our directions, and the

South Dakota Supreme Court ruled that the district court’s

order is binding upon the state courts. We do not, however, sit

as a court of appeals over the South Dakota courts. We have

neither the power nor the inclination to provide the

extraordinary relief SDDS requests. The petition to recall the

mandate is denied.

Ta

SDDS, INC., a South Dakota corporation, Plaintiff

VS.

STATE OF SOUTH DAKOTA,

MARK BARNETT, as Attorney General for the

State of South Dakota; WILLIAM JANKLOW,

as Governor of the State of South Dakota,

and JOYCEHAZELTINE, as Secretary of

State of the State of South Dakota, Defendants,

and ACTION FOR THE ENVIRONMENT,

Intervener/Defendant.

CIV. 91-5121

UNITED STATES DISTRICT COURT F OR THE DISTRICT

OF SOUTH DAKOTA, WESTERN DIVISION

August 24, 1998, Decided

August 24, 1998, Filed

DISPOSITION: Defendants’ motion to set aside

judgments (Docket # 154) denied.

ORDER

On April 24, 1995, this Court entered judgment in favor of

plaintiff and against defendants declaring that South Dakota’s

referral of S.B. 169 violated the dormant commerce clause of

the Constitution of the United States and 42 U.S.C. § 1983, and

assessing costs to defendants.

This judgment was entered in accordance with the opinion

and judgment of the United States Court of Appeals for the

Eighth Circuit, dated F ebruary 6, 1995, and the mandate of that

On December 12, 1996, this Court entered judgment for

plaintiff and against defendants restraining and enjoining them

and their officers, agents, servants, employees, and attorneys,

and all those persons in active concert or Participation with

them who receive actual notice of this order, from relitigating

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in the South Dakota state courts the issue of (1) whether SDDS

had a legitimate claim of entitlement to a permit to operate a

multi- state solid waste disposal site, and (2) whether the

referendum was the proximate cause of SDDS’s dissolution.

This judgment was entered in accordance with the opinion

and judgment of the United States Court of Appeals for the

Eighth Circuit dated October 3, 1996, the mandate of the Court

of Appeals issued November 15, 1996, and that Court’s order

relating to attorney’s fees and costs dated November 29, 1996.

On June 9, 1998 defendants filed a motion to set aside the

above judgments.

Defendants’ motion has been duly considered by this Court

in light of the judgments and mandates of the Eighth Circuit

Court of Appeals.

Accordingly, it is hereby

ORDERED that defendants’ motion to set aside judgments

(Docket # 154) is denied.

Dated this 24th day of August, 1998.

BY THE COURT:

RICHARD H. BATTEY

CHIEF JUDGE

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United States Court of Appeals,

Eighth Circuit.

In re SDDS, INC., a South Dakota

Corporation, Petitioner.

No. 96-2705.

Submitted Aug. 26, 1996.

Decided Oct. 3, 1996.

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

Judges.

MAGILL, Circuit Judge.

South Dakota Disposal Systems, Inc. (SDDS) moved the

district court to enjoin the State of South Dakota and various

state officials in their official capacities, including Mark W.

Barnett, Attorney General of the State of South Dakota, Walter

D. Miller, Governor of the State of South Dakota, and Joyce

Hazeltine, Secretary of the State of South Dakota (Defendants)

from relitigating in the South Dakota state courts Certain issues

previously decided by this Court. The district court denied this

motion, and SDDS now petitions this Court for a writ of

mandamus, directing the district court to issue the

injunction. Defendants object, arguing that this relief is

improper under both the Eleventh Amendment and the

Anti-Injunction Act, 28 U.S.C. § 2283. We disagree, and

conclude that injunctive relief is proper in the circumstances of

this case. Construing SDDS’s petition as an appeal of the

district court’s denial of injunctive relief, we reverse.

i

On the last occasion during which these parties were before

us, we stated that it was “the latest in a Seemingly never-ending

Series of cases arising from SDDS’s six-year-long struggle to

develop a large-scale [multistate solid waste disposal, or

MSWD} facility near Edgemont, South Dakota.” SDDS, Inc.

v. State of S.D., 47 F.3d 263, 265 (8th Cir. 1995) (SDDS VI).

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This description was unfortunately prescient; one-and-a-half

years after penning those words, litigation continues in both

state and federal courts concerning SDDS’s efforts to construct

and operate the MSWD facility. In this latest incarnation of the

case, we are called upon to determine if the Defendants are

attempting to relitigate issues decided previously by this Court

and, if so, whether the Defendants should be enjoined from

attempting such relitigation.

| The facts of this case have been stated and restated by a

a variety of courts; see SDDS VI, 47 F.3d at 265-67; SDDS, Inc.

: v. State of S.D., 994 F.2d 486, 488-91 (8th Cir. 1993) (SDDS

| Ill); SDDS, Inc. v. State of S.D., 843 F. Supp. 546, 548-52

| (D.S.D.1994) (SDDS V), rev'd, SDDS VI, 47 F.3d at 265;

| Matter of 1990 Renewal Application of SDDS, 507 N.W.2d

702, 702-03 (S.D.1993) (SDDS IV); SDDS, Inc. v. State, 481

| N.W.2d 270, 271- 72 (S.D.1992) (SDDS II); Matter of SDDS,

| Inc. , 472 N.W.2d 502, 504-06 (S.D.1991) (SDDS I); SDDS, Inc.

v. State of S.D., Civil Case No. 93- 324 (S.D. 6th Jud. Cir. Ct.

Jan.17, 1996) (SDDS VIN,” and only a brief summary need be

provided here. SDDS purchased land in Fall River County,

South Dakota, in 1988, with the intention of constructing the

“Lonetree” facility, an MSWD site. In 1989, SDDS was

successful in obtaining from the South Dakota Board of

Minerals and Environment (Board) a one-year permit to site,

construct, and operate the MSWD facility. In 1990, the Board

granted SDDS a five-year renewal of its permit. Both permits

were challenged in South Dakota state courts”. In SDDS I, the

> This is, of course, not a complete list of prior judicial

recitations of the facts of this case.

| > Under South Dakota law, an aggrieved party may appeal

an adverse administrative decision to the state courts. See

SDCL 1-26-30. “‘A final determination of an agency decision

is reached when the reviewing court, after deciding the

correctness of the matter on review, affirms the decision or

Ke

lla

South Dakota Supreme Court ruled that the one-year permit

was invalid because the Board had made insufficient findings

of fact. See id, 472 N.W.2d at 513. In SDDS IV, the South ;

Dakota Supreme Court held that, because the one-year permit |

had been declared invalid, the five-year renewal was void ab

initio. See id, 507 N.W.2d at 704. In 1991, on remand after

SDDS I, the Board made the required specified findings that the

proposed MSWD facility was environmentally safe and was in

the public interest. See SDDS VI, 47 F.3d at 265 n.5 (detailing

subsequent administrative history).

remands it to the agency for reconsideration and a decision in

accord with that court’s directive.’” Matter of Exploration

Permit Renewal, Etc., 323 N.W.2d 858, 860 (S.D.1982)

(quoting Matter of Silver King Mines, Permit EX-5, 315

N.W.2d, 689, 693 (S.D.1982) (Morgan, J., dissenting)).

* It does not appear that any South Dakota state court has

addressed the merits of the Board’s 1991 findings that the

MSWD facility was environmentally safe and in the public

interest. Rather, upon judicial review, the case was remanded

to the Board “for the opportunity to reissue Original Permit”

because the original permits had been invalidated. See Br. in

Support of Resp’t’s Answer at 4. SDDS never received reissued

permits.

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take effect on July 1, 1991. See SDDS II, 481 N.W.2d at 272

(determining effective date of 1991 Senate Bill 169).

The other ballot initiative decided by the South Dakota

electorate was a referendum on Senate Bill 169, requiring voter

approval of SDDS’s MSWD site. See SDDS VI, 47 F.3d at

266. The electorate vetoed the MSWD facility, which “shut

down” SDDS’s completion of the Lonetree site. See SDDS IV,

507 N.W.2d at 703%. SDDS challenged the referendum

measure in federal court, arguing that it offended the dormant

commerce clause. We reversed the district court’s grant of

summary judgment to the defendants twice, first holding that

the unsuccessful challenge to Initiative Measure No. 1 in the

South Dakota trial court did not act to collaterally estop the

challenge to the referendum, see SDDS III, 994 F.2d at 494, and

later holding that the referendum violated the dormant

commerce clause. See SDDS VI, 47 F.3d at 272 (reversing

SDDS V).

During the course of this wide ranging litigation, SDDS

never opened its proposed MSWD site. In 1994, it sold the

land planned for the development of the MSWD and went out

of business. SDDS brought suit against the Defendants in

South Dakota state court to recover just compensation for an

alleged uncompensated “taking” of its property by the

Defendants through the unconstitutional referendum, in

violation of the Fifth and Fourteenth Amendments. The South

Dakota state trial court granted summary judgment to the

Defendants, holding that SDDS had no property right in

operating an MSWD site, and that the referendum was not a

* At the time the referendum was decided by the South

Dakota voters, SDDS was still operating under its five-year

renewal permit. It was several years after the referendum placed

“Senate Bill 169 in limbo,” SDDS IV, 507 N.W.2d at 703, long

after SDDS incurred its alleged injuries, that the South Dakota

Supreme Court declared SDDS’s five-year renewal permit

“void ab initio.” Jd. at 704.

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proximate cause of SDDS’s losses. See SDDS VII, Mem. Op.

at 11, 18, 24-25. The appeal of SDDS VI/is pending before the

South Dakota Supreme Court.

Contending that the Defendants were attempting to

relitigate issues decided by this Court in SDDS VI, SDDS

sought an injunction in the federal district court against the

Defendants. The district court s ily denied injunctive

relief,“ and SDDS now petitions this Court for a writ of

mandamus. SDDS requests that we require the district court to

issue an injunction against the Defendants, forbidding them

from relitigating in the South Dakota state courts the issues of

(1) whether SDDS had a legitimate claim of entitlement to a

permit to operate an MSWD, and (2) whether the referendum

was the proximate cause of SDDS’s dissolution. The Defendants

object to the issuance of the writ, arguing that the standards for

a writ of mandamus have not been satisfied, that the Eleventh

Amendment prohibits this suit, that the Anti- Injunction Act

forbids issuance of the writ, and that injunctive relief is not

° — The district court stated:

On April 11, 1996, SDDS filed a motion for the issuance

of an order to show cause, for a speedy hearing, and for a

preliminary and a permanent injunction pursuant to the

Declaratory Judgments Act and the All Writs Act. The

state defendants responded on May 6, 1996. SDDS filed

a reply on May 23, 1996. Essentially, SDDS’s claim for

injunctive relief seeks to have this Court enjoin a

proceeding before the South Dakota Supreme Court. This

Court declines to take such action.Accordingly, having

considered the matter, it is hereby ORDERED that SDDS’s

motion for an order to show cause and for injunctive relief

(Docket # 133) is denied.

SDDS, Inc. v. State of S.D., Civil No. 91-5121 (D.S.D. May 28,

1996), reprinted in I Appellant’s App. at Tab 12.

|

14a

warranted by the facts of the case. We address each of these

arguments in turn.

Il.

The issuance of a writ of mandamus “is a drastic remedy

to be invoked only in extraordinary situations,” Melahn v.

Pennock Ins., Inc., 965 F.2d 1497, 1501 (8th Cir. 1992)

(quotations omitted), and may issue “only if a petitioner is able

to establish a clear and indisputable right to the relief sought,

the defendant has a nondiscretionary duty to honor that right,

and the petitioner has no other adequate alternative

administrative or judicial remedy.” Jn re Lane, 801 F.2d 1040,

1042 (8th Cir. 1986) (quotations and citations omitted). The

Defendants argue that a writ of mandamus is inappropriate to

require a district court to issue an injunction, because such

relief is left to the discretion of the district court. See id.

(“Where a matter is committed to discretion, it cannot be said

that a litigant’s right to a particular result is clear and

indisputable.” (quotations and citations omitted)).

We need not reach the question of whether a writ of

mandamus may issue to correct a district court’s abuse of

discretion in denying injunctive relief. A denial of an

injunction is an immediately appealable interlocutory order, see

28 U.S.C. § 1292(a)(1). Where the liberal standards for notice

of appeal have been met in a case, a petition for a writ of

mandamus may be construed as a notice of appeal from an

immediately appealable order by a district court. See United

States v. Gundersen, 978 F.2d 580, 583-84 (10th Cir. 1992)

(construing petition for mandamus as notice of appeal, and

citing cases); United States v. Green, 499 F.2d 538, 540 n.5

(D.C. Cir. 1974) (per curiam) (citing cases). Here, SDDS’s

petition for mandamus “was the functional equivalent of a

notice of appeal [because] it fulfilled [Fed. R. App. P.] 3's

requirements concerning notice,” Gundersen, 978 F.2d at 583

(analyzing Smith v. Barry, 502 U.S. 244, 112 S. Ct. 678, 116

L.Ed.2d 678 (1992)). SDDS’s petition specified the party

15a

taking the appeal, designated the district court order appealed

from, and named the court to which the appeal was taken.See

id.; see also Fed. R. App. P. 3(c). In all of the circumstances of

this case, therefore, we believe it is appropriate to construe

SDDS’s petition for a writ of mandamus as a notice of appeal.

Il.

The Eleventh Amendment generally bars suits brought

against the states in federal courts. While the specific language

of the Eleventh Amendment refers only to “any suit in law or

equity, commenced or prosecuted against one of the United

States by Citizens of another State, or by Citizens or Subjects

of any Foreign State,” U.S. Const. amend. XI,

we have understood the Eleventh Amendment to stand not

so much for what it says, but for the presupposition which

it confirms. That presupposition, first observed over a

century ago in Hans v. Louisiana, 134 U.S. 1, 10S. Ct.

504, 33 L.Ed. 842 (1890), has two parts: first, that each

State is a sovereign entity in our federal system; and

second, that it is inherent in the nature of sovereignty not

to be amenable to the suit of an individual without its

consent. For over a century we have reaffirmed that

federal jurisdiction over suits against unconsenting States

was not contemplated by the Constitution when

establishing the judicial power of the United States.

Seminole Tribe of Fla. v. Florida, 517 U.S. 44, ----, 116 S. Ct.

1114, 1122, 134 L.Ed.2d 252 ( 1996) (citations and quotations

omitted).

The immunity recognized by the Eleventh Amendment

extends to both suits for monetary damages and those for

declaratory or injunctive relief: “The Eleventh Amendment

does not exist solely in order to prevent federal court judgments

that must be paid out of a State’s treasury; it also serves to

avoid the indignity of subjecting a State to the coercive process

of judicial tribunals at the instance of private parties.” Jd. at

16a

----, 116 S. Ct. at 1124. South Dakota and its state officials

sued in their official capacities would, therefore, normally be

immune from suit in the federal courts.

In Ex parte Young, 209 U.S. 123, 28 S. Ct. 441, 52 L.Ed.

714 (1908), however, the Supreme Court established a

fundamental exception to the Eleventh Amendment’s immunity

doctrine:

Ex parte Young recognized that suits may be brouglit in

federal court against state officials in their official

capacities for prospective injunctive relief to prevent future

violations of federal law. The doctrine of Ex parte Young

is based on the idea that the power of federal courts to

enjoin continuing violations of federal law is necessary to

vindicate the federal interest in assuring the supremacy of

that law.

Fond du Lac Band of Chippewa Indians v. Carlson, 68

F.3d 253, 255 (8th Cir. 1995) (quotations and citations

omitted). See also Denke v. South Dakota Dep't of Social

Servs., 829 F.2d 688, 689 (8th Cir. 1987) (“Eleventh

amendment analysis is an area dominated by formalistic rules,

often neither intuitive nor strictly rational. However, over years

of development, important exceptions to state immunity from

suit have been recognized which allow citizens to vindicate

rights infringed upon by state authorities. Extremely important

in this regard is the substantial exception to the scope of the

eleventh amendment represented by the case of Ex parte Young,

209 U.S. 123, 28 S. Ct. 441, 52 L.Ed. 714 (1908)[,] and its

progeny.”).

Defendants did not contend that SDDS VI was improperly

heard by this Court in violation of the Eleventh Amendment,

and we do not believe that any such argument could have been

successful. As a suit for prospective declaratory relief from

South Dakota’s ongoing violation of the dormant commerce

clause, the Defendants could not have enjoyed immunity under

the Eleventh Amendment in SDDS VI. See Ex parte Young,

17a

209 U.S. at 159, 28 S. Ct. at 454 (“the use of the name of the

State to enforce an unconstitutional act to the injury of

complainants is a proceeding without the authority of and one

which does not affect the State in its sovereign or governmental

Capacity”).

The question presented is therefore whether the

Defendants, who had been properly sued for declaratory relief

in a prior suit, can now assert Eleventh Amendment immunity

from this suit for prospective injunctive relief which seeks only

to effectuate our earlier judgment. An affirmative answer

would allow these Defendants, and all future state defendants,

to effectively ignore judgments rendered in the federal courts,

generating needless relitigation in the state courts, and

rendering our judgments largely nugatory and advisory”. This

” Indeed, it is clear that this is precisely what the Defendants

in this case have attempted to do to our judgment in SDDS VI

almost from the moment the decision was filed. Upon our

remand of the case to the district court for a determination of

attorney’s fees, the Defendants stated:

All that has been obtained for the Plaintiff[ in SDDS V7],

however, is a declaratory judgment that the referendum

was unconstitutional. The court of appeals let stand this

court’s important rulings on the due process and equal

protection issues raised by Plaintiffs.

Plaintiff has, in essence, obtained a judgment which can do

it no good. [FN2 In its response to Defendants’ submission

on the “prevailing party” issue, Plaintiff claims in a

footnote that the ruling of the court of appeals may have

some application in the state “inverse condemnation” case,

but Plaintiff does not explain how the court of appeals

ruling on the commerce clause issue can have any

application to the inverse condemnation case. Additionally,

it is important to note that the state courts could agree with

this court[*]s ruling (which the court of appeals let stand)

18a

that Plaintiff had no property interest which could be

unlawfully taken.] Plaintiff has in fact accomplished

nothing more than obtaining “the moral satisfaction of

knowing that a federal court concluded [its] nights had

been violated....” Farrar vs. Hobbey [Hobby, 506 U.S.

103, 114, 113 S. Ct. 566, 574, 121 L.Ed.2d 494] (1992),

quoting Hewitt v. Helms, 482 [U.S.] 755, 762 [107 S. Ct.

2672, 2676, 96 L.Ed.2d 654] (1987). In these

circumstances, a substantial reduction in the amount

awarded, or [no] award at all, see Farrar, 506 U.S. at 115

[113 S. Ct. at 575], is appropriate. Resp. to Mot. to

Determine Award of Att’ys’ Fees & Costs & Req. for Hr’g

at 13-14, reprinted in I Appellant’s App. at Tab 7 (ellipses

in original). Contrary to the Defendants’

mischaracterizations of SDDS VI, we did not “let stand”

any portion of the district court decision in SDDS V; rather,

we reversed the district court, and remanded the case to the

district court “with instructions to enter judgment in favor

of SDDS.” SDDS VI, 47 F.3d at 272.

Similarly, in opposing SDDS’s requested injunctive relief

in the district court, the Defendants urged the district court to

disregard our decision in SDDS VI by stating that:

SDDS also argues that the Eighth Circuit decision is

binding precedent on the state courts. While the United

States Supreme Court has the authority to enter decisions

binding on the South Dakota Supreme Court, the lower

federal courts do not have such power.

State Defs.’ Br. In Supp. of Resistance to Pl.’s Mot. for Order

to Show Cause & for Speedy Hr’g & for Prelim. & Permanent

Inj. at 14, reprinted in I Appellant’s App. at Tab 10. Contrary

to the Defendants’ rather unique interpretation of federalism,

the judgments of this Court are, in fact, entitled to the same res

judicata and collateral estoppel effect in the South Dakota state

courts as judgments rendered by those courts. See, e.g., City of

19a

is an intolerable result, and one which is not, we believe,

mandated by the Eleventh Amendment. We therefore hold that

the Eleventh Amendment does not bar a suit in the federal court

for injunctive relief to prohibit a state defendant from

relitigating in a state court issues previously decided in a

federal court.

IV.

Embodying fundamental precepts of federalism and comity

between federal and state courts, the Anti-Injunction Act

provides that:

A court of the United States may not grant an injunction to

Stay proceedings in a State court except as expressly

Tacoma v. Tacoma Taxpayers, 357 U.S. 320, 334, 78 S. Ct.

1209, 1217-18, 2 L.Ed.2d 1345 (1958).

* The Defendants, citing Green v. Mansour, 474 U.S. 64,

106 S. Ct. 423, 88 L.Ed.2d 371 (1985), argue that the instant

suit for injunctive relief is in fact a “demand that this Court

direct the South Dakota courts to grant SDDS a monetary

award to be paid from the South Dakota state treasury.” Br. In

Supp. of Resp’t’s Answer at 13. We disagree. Green was an

action for declaratory relief for an alleged past violation of

constitutional rights; “the award of a declaratory judgment in

this situation would be useful in resolving the dispute over the

past lawfulness of respondent’s action only if it might be

offered in state-court proceedings as res judicata on the issue of

liability, leaving to the state courts only a form of accounting

proceeding whereby damages or restitution would be

computed.” Green, 474 U.S. at 73, 106 S. Ct. at 428. By

contrast, the suit before us has been brought to effectuate our

judgment in SDDS VI, a “[rjemed[y] designed to end a

continuing violation of federal law [which was] necessary to

vindicate the federal interest in assuring the supremacy of that

law.” Id. at 68, 106 S. Ct. at 426.

PRR re ae he

20a

authorized by Act of Congress, or where necessary in aid

of its jurisdiction, or to protect or effectuate its judgments.

28 U.S.C. § 2283”. The Supreme Court has “expressly rejected

the view that the anti-injunction statute merely states a flexible

doctrine of comity, and [has] made clear that the statute

imposes an absolute ban upon the issuance of a federal

injunction against a pending state court proceeding, in the

absence of one of the recognized exceptions....” Mitchum v.

Foster, 407 U.S. 225, 228-29, 92 S. Ct. 2151, 2155, 32 L.Ed.2d

705 (1972) (citing Atlantic Coast Line R.R. v. Locomotive

Engrs, 398 U.S. 281, 286-87, 90S. Ct. 1739, 1743, 26 L.Ed.2d

234 (1970) (note omitted)).

* In Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 146,

108 S. Ct. 1684, 1689, 100 L.Ed.2d 127 (1988), the Supreme

Court explained the purpose of the Anti-Injunction Act:

The Act, which has existed in some form since 1793, see

Act of Mar. 2, 1793, ch. 22, § 5, 1 Stat. 335, is a necessary

concomitant of the Framers’ decision to authorize, and

Congress’ decision to implement, a dual system of federal

and state courts. It represents Congress’ considered

judgment as to how to balance the tensions inherent in

such a system. Prevention of frequent federal court

intervention is important to make the dual system work

effectively. By generally barring such intervention, the Act

forestalls the inevitable friction between the state and

federal courts that ensues from the injunction of state

judicial proceedings by a federal court. Due in no small

part to the fundamental constitutional independence of the

States, Congress adopted a general policy under which

state proceedings should normally be allowed to continue

unimpaired by intervention of the lower federal courts,

with relief from error, if any, through the state appellate

courts and ultimately [the United States Supreme Court].

(quotations and citations omitted).

2la

Included in the Anti-Injunction Act are specific,

enumerated exceptions. These exceptions, which “are designed

to ensure the effectiveness and supremacy of federal law,”

Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 146, 108 S. Ct.

1684, 1689, 100 L.Ed.2d 127 (1988), include the relitigation

exception. This exception

was designed to permit a federal court to prevent state

litigation of an issue that previously was presented to and

decided by the federal court. It is founded in the

well-recognized concepts of res judicata and collateral

estoppel.

Id. at 147, 108 S. Ct. at 1690. See also NBA v. Minnesota Pro.

Basketball, Ltd. Partnership, 56 F.3d 866, 871 (8th Cir. 1995)

(“The legislative policy that permits a federal court to enjoin

state court action when a federal court has decided a suit on its

substantive merits has equal force when a critical underlying

issue unrelated to the substantive merits of the action has been

litigated to finality.” (quotations and citations omitted)). As

with all of the statutory exceptions, the relitigation exception is

“narrow and [is] not to be enlarged by loose statutory

construction.” Chick Kam Choo, 486 U.S. at 146, 108 S. Ct. at

1689 (quotations and citations omitted).

We review de novo the applicability of the relitigation

exception.See NBA, 56 F.3d at 871. In order to enjoin a state

court from relitigating an issue, the issue must “actually have

been decided by the federal court.” Chick Kam Choo, 486 U.S.

at 148, 108 S. Ct. at 1690. To determine if this strict and

nalrow prerequisite has been met, we must assess “the precise

state of the record and what the earlier federal order actually

said; [we may not] render a post hoc judgment as to what the

order was intended to say.” Jd. (citing Atlantic Coast, 398 U.S.

at 290, 90 S. Ct. at 1744-45 (emphasis in Original)).

In an extended discussion, the district court in SDDS V

held that SDDS had no protected property interest in operating

a i

t

22a

an MSWD facility, and that the referendum had no effect on

SDDS’s ability to operate an MSWD. The district court stated:

Under South Dakota law, SDDS needs two things in order

to operate its Lonetree facility: (1) a valid permit and (2)

legislative approval from the South Dakota Legislature.

See SDCL 34A-6-1.4 to 34A-6-1.13 (solid waste disposal

facilities must obtain permits); and SDCL 34A-6-53 to

34A-6-56 (solid waste disposal facilities handling in

excess of 200,000 tons of waste annually must get

legislative approval for their operations).

At the time of the Referendum in November 1992, SDDS’s

one-year permit had expired. In any event, that one-year

permit was void because the [Board], in issuing the permit,

failed to make specific findings of fact that the Lonetree

facility was in the public interest and that the facility met

five specified environmental prerequisites.

Although the [Board] had issued SDDS a five-year

renewal permit and the Legislature had passed S.B. 169

approving the operation of the Lonetree facility, the

five-year permit was invalid because it was based upon an

invalid one-year permit. The five-year renewal permit was

void ab initio. In other words, SDDS has never had a valid

permit to operate the Lonetree facility. Without a valid

permit, SDDS has no constitutionally protected property

interest in operating the facility. Both of SDDS’s due

process claims fail.

The Court notes that SDDS’s remaining commerce clause

and equal protection claims rest solely on the effect of the

Referendum, the validity of the Initiated Measure having

already been decided by [the South Dakota state court].

Furthermore, because SDDS has never had a valid permit

to operate its Lonetree facility, S.B. 169 and the

subsequent Referendum “vetoing” that bill have no

practical effect. By the very unambiguous terms of the

Initiated Measure, legislative approval may only be

23a

granted to a facility that is operational “pursuant to solid

waste permit.” SDCL 34A-6-53. SDDS has never had a

valid permit. The legislature cannot have granted approval

of the Lonetree facility if the facility had no permit to

operate. It logically follows that if the legislature was not

in a position to grant approval to the Lonetree facility, then

the enabling legislation (S.B.169) was of no effect. The

Referendum would also be of no effect. If the Referendum

had no effect, the commerce clause and the equal

protection clause are not implicated.

SDDS V, 843 F. Supp. at 553-54 (citations and notations

omitted).

The Defendants, in their brief to this Court in SDDS VI,

argued strenuously that we affirm these holdings. See

Appellee’s Br. in No. 94-1688, at 10-17, 41, reprinted in part in

I Appellant’s App. at Tab 2. SDDS, of course, strongly urged

10

For example, the Defendants previously argued that South

Dakota’s laws regulating solid waste facilities have changed

since SDDS obtained its original 1989 permit. South Dakota’s

solid waste regulations were entirely rewritten in July of 1990,

and have been amended once before the November 1992

Referendum and once after. Appellee’s Appendix G. Since the

September 1991 findings issued by the Board were based on the

original 1989 record, the September 1991 findings do not

address or consider these regulatory changes. The Board must

determine compliance with these new regulatory requirements

before a solid waste permit can issue; this determination was

never made and SDDS is therefore not entitled to a permit.

Appellee’s Br. in No. 94-1688, at 14-15, reprinted in

I Appellant’s App. at Tab 2. See also id at 41 (“More

importantly the Referendum’s disapproval of Senate Bill 169

did not impact SDDS’s ability to accept out of state waste

because SDDS could not accept any waste, regardless of the

source, until it obtained new state solid waste permits.”

(emphasis in original)).

24a

that we reverse the district court on these points. See

Appellant’s Reply Br. in No. 94-1688, at 2-10, reprinted in

I Appellant’s App. at Tab 3.4!

In SDDS VI, we reversed the district court’s judgment. See

47 F.3d at 272. In so doing, we explicitly accepted SDDS’s

arguments on both of these contested issues, and we explicitly

rejected the Defendants’ positions. Regarding the protected

property interest in operating the MSWD, we stated:

In 1991, S.D. Codified Laws § 34A-6-1.13 was amended

and the implementing regulations were rewritten.Although

the ultimate question of whether the facility was

environmentally safe and in the public interest remained

the same, several factors weighing into the agency’s

decision changed. On remand after SDDS I, the agency

made the specific findings required by its revised

regulations. The agency found the Lonetree facility to be

environmentally safe, using language that parallels the

applicable regulation.Appellant’s App. at 117 (Finding

# 52, paralleling S.D. Admin.R. 74:27:17:01). The agency

found the facility to be in the public interest. Appellant’s

'! For example, SDDS previously argued that the procedural

defect in the [Board’s] original decision — the lack of findings

that resulted in the remand in SDDS ] — had been cured by the

time of the Referendum.... [O}n remand the [Board] entered

extensive findings responsive to the [South Dakota] Supreme

Court’s mandate and concluded that SDDS had met “all

requirements” for the issuance of a solid waste permit under the

relevant laws and regulations of South Dakota.

Appellant’s Reply Br. in No. 94-1688, at 7, reprinted in

Appellant’s App. at Tab 3 (note omitted). See also id. at 3

(“[t}he State attempts to avoid the consequence of its admission

concerning the Referendum’s ‘practical effect,’ by engaging in

an inventive but, unfortunately, distorted analysis of the state

court litigation”).

25a

App. at 121 (Finding # 72). Both findings were preceded

by numerous supporting factual findings. The revised

[Board] findings also contain a specific legal conclusion

that all requirements for the permit had been met.

Appellant’s App. at 122 (Conclusions of law # 3 & # 4).

SDDS VI, 47 F.3d at 265 n.5 (emphasis added). This

determination that all of the factual predicates and legal

requirements for SDDS’s permit had been met was necessarily

dispositive of SDDS’s property interest in the permit itself. See

Littlefield v. City of Afton, 785 F.2d 596, 602 (8th Cir. 1986)

(“We hold that appellants have a property interest in the

building permit because they complied with all the legal

requirements contained in the ordinances of the City of

Afton.Appellants need not comply with illegal conditions in

order to have a property interest in the permit.” (emphasis in

original)), holding limited in part on other grounds, Lemke v.

Cass County, Neb., 846 F.2d 469, 470-71 (8th Cir. 1987) (per

curiam) (en banc) (holding that “[wJhether a substantive due

process claim may arise from a denial of a zoning permit is an

open question in this circuit and need not be decided in this

case”).1¥

‘2 We note that these factual determinations by an

administrative agency must be given “great weight” by South

Dakota courts. See SDCL 1-26-36.

'> In adopting the factual findings of the Board in SDDS VI,

we did not then — and need not now — address the issue of

whether those findings were entitled to claim preclusive effect.

See Astoria Federal Sav. & Loan Ass’n v. Solimino, 501 U.S.

104, 109-10, 111 S. Ct. 2166, 2170, 115 L-Ed.2d 96 (1991)

(“Although administrative estoppel is favored as a matter of

general policy, its suitability may vary according to the specific

context of the rights at stake, the power of the agency, and the

relative adequacy of agency procedures.”). Put bluntly, here we

are not concerned with determining the accuracy of our

26a

Regarding the effect of the referendum on SDDS, we stated

in SDDS VI that:

Despite the fact that it has previously conceded that “[t}he

practical effect of the referendum was to prohibit the

construction” of the Lonetree facility, Appellant’s App. at

39, South Dakota now argues that because the [Board]

permit had been revoked, the referendum had no impact,

discriminatory or otherwise, on Lonetree. However, if this

court were to ignore South Dakota’s intermediary actions

and look only to the result, it would reward South Dakota

for acting unconstitutionally. Moreover, the administrative

permit was voided due to a procedural defect, not because

of any finding that the Lonetree facility was

environmentally dangerous. Thus, Lonetree could reapply

for the administrative permit, and the referendum at the

very least made the Lonetree project more difficult and

expensive to accomplish.

Id. at 270 n.10 (citations and quotations omitted).

decision in SDDS VI, but rather in insuring its effectiveness.

See, e.g., Moe v. Moe, 496 N.W.2d 593, 595 (S.D.1993) (res

judicata applies “whether the court was correct at the time or

not”). If the Defendants were dissatisfied with our adjudication

of their case in SDDS VI, their options were to request

rehearing by this Court en banc or to petition the United States

Supreme Court for a writ of certiorari. They may not, however,

collaterally challenge our decisions in the South Dakota state

courts. See City of Tacoma, 357 U.S. at 334, 78 S. Ct. at

1217-18.

'* Indeed, our ruling echoed that of the South Dakota

Supreme Court in SDDS IV, 507 N.W.2d at 703, which found

that the referendum “placed Senate Bill 169 in limbo and shut

down the [Lonetree] facility pending the outcome of the general

election.” See also SDDS III, 994 F.2d at 489 (“S.B. 169 was,

therefore, effectively vetoed by the citizens of South Dakota

27a

The issues which the Defendants now wish to relitigate in

the state courts were, therefore, actually and finally decided by

this Court in SDDS VI. Under South Dakota’s rules of claim

preclusion or collateral estoppel, we conclude that this Court’s

decision in SDDS VI bars the Defendants from relitigating these

settled issues in subsequent litigation in the state courts. See,

e.g., Moe v. Moe, 496 N.W.2d 593, 595 (S.D.1993):

[I]f the prior final judgment or order had been rendered by

a court of competent jurisdiction, it is conclusive as to all

rights, questions, or facts directly involved and actually, or

by necessary implication, determined therein, whether the

court was correct at the time or not.

We apply four factors to determine whether the doctrine of

[claim preclusion] bars this appeal: (1) whether the issue

decided in the former adjudication is identical with the

present issue; (2) whether there was a final judgment on

the merits; (3) whether the parties are identical; and (4)

whether there was a full and fair Opportunity to litigate the

issues in the prior adjudication.

(citations and quotations omitted). See also Black Hills Novelty

Co. v. South Dakota Comm’n, 520 N.W.2d 70, 73 (S.D.1994)

(describing elements of collateral estoppel). In this case, all of

these elements have unquestionably been met: the issues are

the same, the parties are the same, there was a final judgment

on the merits in SDDS VI, and the record amply reveals that the

Defendants were not only given, but took every opportunity, to

fully and fairly litigate these issues before us. Because the

Defendants are barred by claim preclusion from relitigating the

issues of (1) whether SDDS had a legitimate claim of

entitlement to a permit to operate an MSWD, and (2) whether

the referendum was the proximate cause of SDDS’s dissolution,

the relitigation exception to the Anti-Injunction Act permits

and the Lonetree project has been unable to proceed since.”’).

28a

injunctive relief to prevent them from so relitigating these

issues in the South Dakota state courts.”

V.

We recognize, however, that “[t]he fact that an injunction

may issue under the Anti-Injunction Act does not mean that it

must issue. The injunction must be an otherwise proper

exercise of the [court’s] equitable power.” Daewoo Elecs. v.

Western Auto Supply Co., 975 F.2d 474, 478 (8th Cir. 1992).

We review the district court’s denial of injunctive relief for

abuse of discretion.See Goff v. Harper, 60 F.3d 518, 520 (8th

Cir. 1995). “Abuse of discretion occurs if the district court

rests its conclusion on clearly erroneous factual findings or if

its decision relies on erroneous legal conclusions.” Hosna v.

Groose, 80 F.3d 298, 303 (8th Cir.) (quotations and citations

omitted), cert. denied, 519 U.S. 860, 117 S. Ct. 164,

'S Under the Full Faith and Credit Act, 28 U.S.C. § 1738, we

are bound by a state court’s application of its res judicata rules

to our judgments. See Parsons Steel, Inc. v. First Ala. Bank,

474 U.S. 518, 524, 106 S. Ct. 768, 772, 88 L.Ed.2d 877 (1986):

We believe that the Anti-Injunction Act and the Full Faith

and Credit Act can be construed consistently, simply by

limiting the relitigation exception of the Anti-Injunction

Act to those situations in which the state court has not yet

ruled on the merits of the res judicata issue. Once the state

court has finally rejected a claim of res judicata, then the

Full Faith and Credit Act becomes applicable and federal

courts must turn to state law to determine the preclusive

effect of the state court’s decision.

Because the South Dakota trial court did not rule on the claim

preclusive effect of SDDS VI, see SDDS VII, Mem. Op. at 2 n.3,

5, 20-21, we are not precluded from protecting our judgment in

SDDS VI under the relitigation exception to the Anti-Injunction

Act. See Daewoo Elecs. v. Western Auto Supply Co., 975 F.2d

474, 479 (8th Cir. 1992).

29a

136L.Ed.2d 107(1996). See also Walser v. Toyota Motor Sales,

U.S.A., Inc., 43 F.3d 396, 401 (8th Cir. 1994) (“We will not

disturb a district court’s discretionary decision if that decision

remains within the range of choice available to the district

court, accounts for all relevant factors, does not rely on any

irrelevant factors, and does not constitute a clear error of

judgment.” (quotations and citations omitted)).

In analyzing SDDS’s motion for injunctive relief, the

district court stated that:

Essentially, SDDS’s claim for injunctive relief seeks to

have this Court enjoin a proceeding before the South

Dakota Supreme Court. This Court declines to take such

action.

SDDS, Inc. v. State of S.D., Civil No. 91-5121 (D.S.D.

May 28, 1996), reprinted in I Appellant’s App. at Tab 12.

While this description overstates the degree of relief requested

by SDDS — which sought to enjoin the relitigation of specific

issues, rather than a blanket injunction of all consideration of its

dispute with the Defendants by the South Dakota Supreme

Court — it does represent a proper concern by the district court

for a core element of federalism, embodied by the

Anti-Injunction Act, that the federal courts should not interfere

with the state courts’ operation.See, e.g., Southwest Airlines Co.

v. Texas Int'l Airlines, 546 F.2d 84, 91 (5th Cir. 1977) ( “few

public interests have a higher claim upon the discretion of a

federal chancellor than the avoidance of needless friction with

state policies” (analyzing abstention doctrine and

Anti-Injunction Act) (quoting Railroad Comm'n v. Pullman

Co., 312 U.S. 496, 500, 61 S. Ct. 643, 645, 85 L.Ed. 971

(1941))), cert. denied, 434 U.S. 832, 98 S. Ct. 117, 54 L.Ed.2d

93 (1977); but see United States v. Rural Elec. Convenience

Co-Op. Co., 922 F.2d 429, 439 (7th Cir. 1991) (“we do not

believe that comity and federalism should be considered ‘public

interest’ factors that militate against the issuance of an

injunction”).

30a

The district court’s analysis fails, however, to consider the

factors which support the issuance of injunctive relief in this

case. In Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109,

113 (8th Cir. 1981) (en banc), this Court held that:

Whether a preliminary injunction should issue involves

consideration of (1) the threat of irreparable harm to the

movant; (2) the state of the balance between this harm and

the injury that granting the injunction will inflict on other

parties litigant; (3) the probability that movant will succeed

on the merits; and (4) the public interest.

Applying the Dataphase factors to the case before us, we

conclude that the district court abused its discretion in denying

injunctive relief. Requiring SDDS to relitigate in the state court

issues previously decided by this Court constitutes an

irreparable harm. See, e.g., Daewoo, 975 F.2d at 478

(affirming district court’s finding that petitioner “would suffer

irreparable harm if injunctive relief were not issued because it

would face relitigation of claims already adjudicated in its

favor”).”

Goodrich v. Supreme Court of S.D.,511 F.2d 316, 317 (8th

Cir. 1975) (refusing to enjoin state court disbarment proceeding

(citing Younger v. Harris, 401 U.S. 37, 46, 91 S. Ct. 746, 751,

27 L.Ed.2d 669 (1971))). Where a petitioner seeks to enjoin a

state court’s civil proceeding, however, we have only required

a showing of “irreparable harm” to allow a grant of injunctive

relief. See Daewoo, 975 F.2d at 478 (analyzing Goodrich).

While issuing the injunction in this case will foreclose the

opportunity for the Defendants to relitigate issues in the state

court, we do not believe that this is a legitimate harm which

must be balanced. As noted above, the Defendants had one full

'© A petitioner seeking to enjoin a criminal or quasi-criminal

state court proceeding must demonstrate a threat of “great and

immediate irreparable injury that cannot be eliminated by his

defense to the state proceeding.”

3la

and fair opportunity to litigate these issues in the federal forum,

and the rules of equity do not require that they be given a

second bite at the apple in the state forum in order to obtain a

more favorable result. See, e.g., Hart Steel Co. v. Railroad

Supply Co., 244 U.S. 294, 299, 37 S. Ct. 506, 508, 61 L.Ed.

1148 (1917) (“This doctrine of res judicata is not a mere matter

of practice or procedure inherited from a more technical time

than ours. It is a rule of fundamental and substantial justice, of

public policy and of private peace, which should be cordially

regarded and enforced by the courts to the end that rights once

established by the final judgment of a court of competent

jurisdiction shall be recognized by those who are bound by it in

every way, wherever the judgment is entitled to respect.”

(quotations and citation omitted)).

The third and fourth Dataphase elements also support

issuance of an injunction in this case. As discussed above,

SDDS successfully litigated in SDDS VI the issues currently

contested by the Defendants; SDDS’s success on the merits of

the underlying issue is therefore already secured. In addition,

the public policy concerns of finality and repose informing our

res judicata jurisprudence strongly supports the protection of

our previous judgment. While the interference with a state

court proceeding is generally opposed by public policy, this

“injunction will promote judicial economy and protection of

parties from harassing, duplicative litigation, interests which

the federal and state courts share.” Daewoo, 975 F.2d at 479

(citation omitted).

We find no merit in the Defendants’ remaining arguments

opposing the granting of injunctive relief. We therefore reverse

the district court’s denial of injunctive relief in this case, and

remand to the district court for an order enjoining the

Defendants from relitigating in the South Dakota state courts

the issues of (1) whether SDDS had a legitimate claim of

entitlement to a permit to opereie an MSWD, and (2) whether

the referendum was the proximate cause of SDDS’s dissolution.

32a

United States Court of Appeals,

Eighth Circuit.

SDDS, INC., a South Dakota

Corporation, Appellant,

¥.

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 Hazeitine,

Secretary of State of the State of South

Dakota, Appellees,

Action for the Environment, Intervenor Below.

No. 94-1688.

Submitted Nov. 15, 1994.

Decided Feb. 6, 1995.

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 § 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,

33a

we hold that the referendum violates the dormant commerce

clause. Accordingly, we reverse’

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)” 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 § 34A-6-1.16

(1986 & Supp.1989). After much judicial” and political!’

wrangling, the Board of Minerals and the Environment (BME),

' We express no view as to the merits of the due process or

equal protection claims brought by SDDS.

* The Department has since changed its name to the

Department of Environment and Natural Resources. We will

use the old name throughout this opinion in the hope that it

may, in some small way, simplify this appeal.

* The DWNR failed to act upon the application within 120

days, as required by S.D.Admin.R. 74:27:04:05(2). SDDS

sued, and in SDDS, Inc. v. South Dakota Dep’t of Water &

Natural Resources, Civ. Case No. 18-179 (S.D. 6th Cir. Ct. J uly

5, 1989), the DWNR was ordered to act upon the application.

* After it was forced to act, the DWNR initially

recommended that the application be approved. South Dakota

Governor Mickelson intervened and caused the DWNR to

reverse its position, resulting in a referral to the BME.

34a

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 § 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 Jn

re Application of SDDS, Inc., for a Solid Waste Permit, 472

N.W.2d 502 (S.D.1991) (SDDS J), 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,”

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

° ‘In 1991, S.D.Codified Laws § 34A-6-1.13 was amended

and the implementing regulations were rewritten.Although the

ultimate question of whether the facility was environmentally

safe and in the public interest remained the same, several

factors weighing into the agency’s decision changed. On

remand after SDDS I, the agency made the specific findings

required by its revised regulations. The agency found the

Lonetree facility to be environmentally safe, using language

that parallels the applicable regulation.Appellant’s App. at 117

(Finding # 52, parallelling $S.D.Admin.R. 74:27:17:01). The

agency found the facility to be in the public interest.

Appellant’s App. at 121 (Finding # 72). Both findings were

preceded by numerous supporting factual findings. The revised

BME findings also contain a specific legal conclusion that all

requirements for the permit had been met. Appellant’s App. at

122 (Conclusions of law # 3 & # 4).

35a ;

Renewal Application of SDDS, Inc., 507 N.W2d 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 § 12-13-9 (1982

& Supp.1994), and public comment on, S.D. Codified Laws

§ 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 § 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 § 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.”

Ee

36a

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

37a

facility’. 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

IHl), 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

° — §.B. 169 never had any effect because it would not become

effective as law unless and until it passed the referendum.

SDDS, Inc. v. State, 481 N.W.2d 270 (S.D.1992) (SDDS II).

38a

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 from an outside source”’); Jn re

Southeast Ark. Landfill, Inc., 981 F.2d 372, 373 (8th Cir. 1992)

(facial discrimination where state statute divided state into eight

districts and restricted receipt of waste originating “outside of

the District in which [a landfill] is located”); Waste Sys. Corp.

v. County of Martin, Minn., 985 F.2d 1381, 1386 (8th Cir.

1993) (facial discrimination where ordinance required disposal

of MSW generated within county at in-county disposal facility).

No one contends that the referendum is facially discriminatory.

However, facial discrimination is merely one of the ways in

which a state may “artlessly disclose an avowed purpose to

discriminate.” Dean Milk Co. v. City of Madison, 340 U.S.

349, 354, 71 S. Ct. 295, 298, 95 L.Ed. 329 (1951).

The other two forms of discrimination are more subtle and

require us to examine the overall effect of the challenged

39a

measures”. Waste Sys. Corp., 985 F.2d at 1386. A second way

in which a challenged measure may discrimi is that a

facially neutral measure may have.a discrimi purpose.

See, e.g., Hunt v. Washington State Apple Advertising Comm'n,

432 U.S. 333, 352-53, 97S. Ct. 2434, 2446-47, 53 L.Ed.2d 383

(1977) (discriminatory purpose where facially neutral state

statute prohibiting state grading from appearing on apple boxes

discriminated against Washington apples that carry state

grades). Third, a facially neutral measure may have a

discriminatory effect. See, e.g., Maine v. Taylor, 477 U.S. 131,

148 n.19, 106 S. Ct. 2440, 2453 n.19, 91 L.Ed.2d 110 (1986)

(discriminatory effect may be found where state “respond{s] to

legitimate local concerns by discriminating arbitrarily against

interstate trade”); GSW, Inc. v. Long County, Ga., 999 F.2d

1508, 1517 (11th Cir. 1993) (discriminatory effect where

county imposed 150-mile restriction on Origin of waste);

Government Suppliers Consol. Serv. v. Bayh, 975 F.2d 1267,

1278-79 (7th Cir. 1992) (discriminatory effect where state

statute imposed “backhaul ban” and additional registration and

stickering requirements), cert. denied, 506 U.S. 1053, 113

S. Ct. 977, 122 L.Ed.2d 131 (1993).

At the second step of the analysis, we apply the appropriate

level of scrutiny. The Supreme Court has established two

levels of scrutiny. The determinative factor is the presence or

absence of discrimination against interstate commerce. If the

State measure is discriminatory, it is subjected to the “strictest

scrutiny,” Oregon Waste Sys., Inc. v. Department of Envil.

Quality of the State of Oregon, 511 U.S. 93, ----, 114 S. Ct.

1345, 1351, 128 L.Ed.2d 13 (1994) (quoting Hughes, 441 U.S.

at 337, 99 S. Ct. at 1736-37), and a “virtually per se rule of

’ “[The evil of protectionism can reside in legislative means

as well as legislative ends.” Philadelphia, 437 U.S. at 626, 98

S. Ct. at 2536-37. Facial discrimination generally involves a

discriminatory purpose and a discriminatory effect, while the

other two forms of discrimination involve one or the other.

40a

invalidity” applies. Oregon Waste Sys., 511 U.S. at ----, 114

S. Ct. at 1351 (quoting Philadelphia, 437 U.S. at 624, 98 S. Ct.

at 2535-36); Landfill, 981 F.2d at 375.Southeast Ark®. If

“other legislative objectives are credibly advanced and there is

no patent discrimination against interstate trade,” the measure

is subjected to a more flexible balancing test. Pike v. Bruce

Church, 397 U.S. 137, 142, 90 S. Ct. 844, 847, 25 L.Ed.2d 174

(1970); Philadelphia, 437 U.S. at 624, 98 S. Ct. at 2535-36;

Waste Sys. Corp., 985 F.2d at 1385-86; Southeast Ark. Landfill,

981 F.2d at 375. We address each of these two steps in turn.

B. What Level of Scrutiny: Is there discrimination?

Although the referendum is not facially discriminatory, we

find that the referendum was certified and that the referred

measure was defeated for a discriminatory purpose. We also

find that the referendum has a discriminatory effect against

interstate commerce. We therefore apply the “strictest

scrutiny” to the referendum.

1. Does the referendum have a discriminatory

purpose?

The presence of a discriminatory purpose is one of three

ways to trigger strict scrutiny. Hunt, 432 U.S. at 352-53, 97

* We (and numerous other courts) have previously stated

that Philadelphia establishes a “per se rule of invalidity.”

Waste Sys. Corp., 985 F.2d at 1387. Although this statement

may be inaccurate in a technical sense (the full quotation from

Philadelphia is “a virtually per se rule of invalidity”), it

accurately states the results of cases in which strict scrutiny is

applied. The only way that discriminatory state action can

withstand this level of scrutiny is if the state demonstrates that

the out-of-state articles are more dangerous than are in-state

articles. Chemical Waste Mgmt., 504 U.S. at ---- - ----, 112

S. Ct. at 2014-15 (applying principle to waste); Taylor, 477

US. at 131, 106 S. Ct. at 2440-43. Neither party to this appeal

makes any such claim.

4la

S. Ct. at 2446-47; Chemical Waste Megmt., 504 U.S. at ---- n.6,

1128S. Ct. at 2015 n.6; Waste Sys. Corp., 985 F.2d at 1381. The

record is replete with direct and indirect evidence of an avowed

discriminatory purpose behind the referendum.

The record contains two pieces of direct evidence of a

discriminatory purpose. First, in SDDS JII, Judge Zinter noted

that the initiative “was purposely drafted to insure that, except

for Lonetree, the Initiated Measure would not apply to existing

or foreseeable future landfills that dispose of South Dakota

waste.” Appellant’s App. at 184. The dual administrative and

legislative approval required by the initiative was specifically

designed and intended to hinder the importation of out-of-state

waste into South Dakota. The purpose of the first and only

referendum under the initiative cannot be divorced from the

purpose of the initiative itself. The initiative was drafted to

defeat a specific “out-of-state dump” by requiring an additional

approval, and the referendum concerns that very approval for

the same “out-of- state dump.” We believe that the

discriminatory purpose behind the initiative infected the

referendum as well. Second, the legislative history of the

referred measure is brimming with protectionist rhetoric. The

state-sponsored pamphlet that accompanied the referendum

contained a “con” statement that exhorted voters to vote against

the “out-of-state dump” because “South Dakota is not the

nation’s dumping grounds,” and “[a] ‘NO’ vote will prevent

Lonetree from operating, and keep its imported garbage out of

South Dakota.” This is ample evidence of a discriminatory

purpose to trigger strict scrutiny.

In addition to this direct evidence of a discriminatory

purpose, there is substantial indirect evidence that the

referendum was motivated by a discriminatory purpose. In

Hunt, the Supreme Court found “it somewhat suspect” that the

means used to achieve the state’s “ostensible ... purpose” were

relatively ineffective. Hunt, 432 U.S. at 352, 97 S. Ct. at 2446.

Likewise, South Dakota has employed a highly ineffective

means to pursue its ostensible purpose of environmental

42a

protection.After the initiative passed, a large-scale MSWD

facility in South Dakota was required to obtain two things: an

administrative permit and legislative authorization.South

Dakota argues that large MSWD facilities generally pose a

greater risk to the environment than do smaller facilities. We

will assume for the sake of our decision that this is true.

However, although the general difference in risk between larger

and smaller facilities justifies a general requirement of

legislative approval for large MSWD facilities, a general

difference in risk, without more, is insufficient to support a

particular denial of legislative approval. South Dakota must

demonstrate not only that there are legitimate interests

justifying the general requirement of dual approval, but it must

also show that this particular review furthered those goals.

Although SDDS III establishes that requiring both

administrative and legislative approval for large facilities is

permissible because the difference in risk between large and

small facilities is a legitimate state interest, South Dakota has

completely failed to demonstrate that the referendum that

denied legislative approval for the Lonetree facility in any way

furthered the state’s legitimate concerns with safety and

environmental protection.

South Dakota’s most significant environmental protection

device is the administrative permitting process for SWD

facilities. Anyone who sites, develops or operates a SWD

facility in South Dakota must obtain a permit from the DWNR.

S.D.Codified Laws § 34A-6-1.4 (1992). SDDS sought a permit

for the Lonetree facility from the DWNR, and when the permit

was contested, the BME held hearings to determine whether the

Lonetree facility was environmentally safe and in the public

interest. The permit was granted, appealed, remanded,

reissued, reappealed, renewed, and ultimately voided. The fact

that SDDS’s permit for the Lonetree facility was so carefully

scrutinized indicates that the administrative permitting process

is a relatively effective means of environmental protection.In

fact, South Dakota admits that the Lonetree facility is safe and

43a

in the public interest if operated in accordance with the DWNR

permit conditions. Appellant’s App. at 165. Thus, the benefit

of the added requirement of legislative approval is not that the

legislature provides the sole means by which South Dakota

protects its environment from potentially unsafe SWD

facilities. Rather, the legislative approval provides a second

opportunity to review the proposed facility. Thus, the dual

process provides an incremental benefit over the administrative

process alone to the extent that the legislature is able to detect

unsafe facilities that are not detected by the DWNR.

Because the benefit of legislative review is that it screens

out unsafe large facilities that survived the administrative

review process, the benefit of each legislative review is directly

proportional to the amount of scrutiny of the environmental

effects of the proposed facility that occurs in that review”. The

challenged referendum cannot be said to have provided any

benefits because the body that disapproved the Lonetree facility

(i.e., the South Dakota electorate) was provided with: (1) no

standards or information to use to evaluate the benefits and

risks of the Lonetree facility; and (2) information that leads to

an unreliable result. South Dakota has admitted that there were

° Viewing the benefit in this manner distinguishes the dual

permitting measure from the absolute bans on large landfills

that have been approved in dicta. See, e. g., Southeast Ark.

Landfill, 981 F.2d at 376; Fort Gratiot Landfill v. Michigan

Dep't of Natural Resources, 504 U.S. 353, ----, 112 S. Ct. 2019,

2027, 119 L.Ed.2d 139 (1992). An absolute ban is analogous to

a permissible quarantine law. There is a legitimate state interest

in environmental protection, and the absolute ban is the best, or

at least a permissible, way to achieve this goal. South Dakota’s

legislative review process, by contrast, although supported by

the same state interest in the abstract, simply does nothing to

further this purported goal. Thus, the fact that legislative review

is less restrictive than an absolute ban, rather than being an

asset, proves fatal. |

44a

no standards to guide the electorate. Appellant’s App. at 166.

Indeed, in SDDS III, Judge Zinter noted that the referral was a

“standardless review by the electorate.” Appellant’s App. at

207 n.9. The voters simply voted yes or no without any criteria

and with severely limited information to guide them in

evaluating the effects of the Lonetree facility. Thus, because

the voters were not provided with any meaningful criteria, the

defeat of the referred measure cannot be seen as improving

environmental protection.

Additionally, voters were bombarded with protectionist

propaganda that renders the result of the referendum unreliable

as an environmental review. The legislative history of the

referred measure consists largely of the state-sponsored

explanatory pamphlet that contains an official explanation and

arguments pro and con.Since the referred measure was

defeated, the “con” statement is the most important. See Kassel

v. Consolidated Freightways Corp., 450 U.S. 662, 680, 101

S. Ct. 1309, 1321, 67 L.Ed.2d 580 (1981) (Justices Brennan and

Marshall, concurring in judgment) (noting that dispositive issue

is lawmakers’ assessment of benefits and burdens). The con

statement mentions general findings by the EPA that all

landfills eventually degenerate, and also mentions recycling and

the potential for hazardous waste dumping. However, no

connection is made between these vague and general statements

and the Lonetree facility.

Moreover, the few specific environmental concerns that are

mentioned in the middle four paragraphs are sandwiched

between five paragraphs containing pleas to reject “imported

garbage” and the “out-of-state dump.” This protectionist

concern clearly emerges as the dominant reason to reject the

referred measure. The opposition begins and ends its

presentation with a plea to keep South Dakota from becoming

the nation’s dumping grounds. Such propaganda does nothing

to enhance any meaningful review of the environmental impact;

it merely allows protectionism to run rampant.

45a

South Dakota purports to seek a second review of

large-scale SWD facilities that pose increased environmental

risks in order to protect its natural resources, but this particular

review consisted of a referendum steeped in inflammatory

propaganda and does virtually nothing to further this purported

goal. This indirect evidence strengthens the conclusion that the

denial of approval had a discriminatory purpose, and confirms

our decision that the referendum must receive strict scrutiny.

2. Does the referendum have a discriminatory effect?

Alternatively, even if South Dakota had not openly

declared a discriminatory purpose, the referendum is

discriminatory in its effect, and this type of discrimination will

also trigger strict scrutiny’. Hughes, 441 U.S. at 336, 99S. Ct.

at 1736; Hunt, 432 U.S. at 352-53, 97 S. Ct. at 2446-47. Hunt

applied strict scrutiny to a facially neutral statute in a situation

that is analogous to the referral of S.B. 169. In Hunt, North

© Despite the fact that it has previously conceded that “[t]he

practical effect of the referendum was to prohibit the

construction” of the Lonetree facility, Appellant’s App. at 39,

South Dakota now argues that because the BME permit had

been revoked, the referendum had no impact, discriminatory or

otherwise, on Lonetree. However, “{i]f this court were to

ignore [South Dakota’s] intermediary actions and look only to

the result, it would reward [South Dakota] for acting

unconstitutionally.” GSW, Inc., 999 F.2d at 1518. Moreover,

the administrative permit was voided due to a procedural

defect, not because of any finding that the Lonetree facility was

environmentally dangerous. Thus, Lonetree could reapply for

the administrative permit, and the referendum at the very least

made the Lonetree project more difficult and expensive to

accomplish. The absence of a reapplication to the BME is not

fatal. See Diamond Waste, Inc. v. Monroe County, Ga., 939

F.2d 941, 943 (11th Cir. 1991) (applying Pike test to invalidate

county’s disallowance of landfill, despite absence of application

required by statute).

46a

Carolina banned the placement of any grading (other than

USDA grading) on closed shipping containers of apples. This

measure affected only Washington state apples (which bore

Washington state grades). Thus, in Hunt, out-of- staters were

singled out to bear 100% of the cost of the measure. The

structure of the “garbage market” in South Dakota is such that

the referendum has a discriminatory effect. South Dakota

generates 600,000 to 700,000 tons of MSW each year. In

addition to this in-state waste, three facilities accept out-of-state

waste (they accepted 60,000 tons in 1992). As a result of the

low rate of domestic waste generation and the costs of

regulation, the existing disposal facilities in South Dakota are

fairly small; the largest facility disposes of 125,000 tons per

year. New facilities must be large scale in order to recover the

costs imposed by environmental regulations. The Lonetree

facility was designed to accept 1.5 million tons of MSW per

year. According to the literature accompanying the

referendum, 95%" of this waste would originate outside South

Dakota.

Hunt is analogous to this appeal because both involve a

facially neutral measure that exports costs to out-of-staters™.

'! SDDS III found that 90% of the waste would originate

outside South Dakota. Slip op. at 3. SDDS makes similar

claims.

'2 The fact that only 90% rather than 100% of the costs of

excluding the waste fall on out-of-staters does not eliminate the

discriminatory effect. This fact merely reduces the scope of the

discrimination.Fort Gratiot, 504 U.S. at ----, 112 S. Ct. at 2025;

Waste Sys. Corp., 985 F.2d at 1387 n.11. The extent of the

discrimination is not relevant to the prior determination

whether the state has discriminated against interstate

commerce. Wyoming v. Oklahoma, 502 U.S. 437, 455-56, 112

S. Ct. 789, 801, 117 L.Ed.2d 1 (1992). In a similar vein, the fact

that South Dakota later chose to permit importation of waste by

47a

Hunt was a case where North Carolina sought to eliminate

Washington’s competitive advantages, so that North Carolina

farmers could usurp part of the North Carolina apple market

that belonged to Washington growers. Here South Dakota is

attempting to exclude out-of-state trash that has a “negative”

value, thus forcing other states to bear the cost of disposing of

the trash when the market would otherwise dispose of the trash

in South Dakota. Any distinction between these two species of

protectionism is of no consequence. Waste Sys. Corp., 985

F.2d at 1386. Indeed, Judge Zinter noted an analogy between

the initiative and Hunt in SDDS IJ]. Appellant’s App. at 182.

Moreover, we note that in SDDS III, Judge Zinter specifically

found that the initiative had a discriminatory effect. Slip op. at

14-15. Just as the purpose of the initiative and the referendum

are intimately connected, so are the effects. Thus, because the

garbage market of South Dakota is such that the referendum so

predominantly affects only out-of-staters, we believe that the

referendum of S.B. 169 is discriminatory in effect, and must

receive strict scrutiny.

C. Application of Strict Scrutiny

Once strict scrutiny is triggered, “the burden falls on the

State to justify [the measure] both in terms of the local benefits

flowing from the statute and the unavailability of a

nondiscriminatory alternative adequate to preserve the local

interests at stake.” Hunt, 432 U.S. at 353, 97 S. Ct. at 2446-47;

Chemical Waste Mgmt., 504 U.S. at ----, 112 S. Ct. at 2014.

We find that the referendum fails both prongs of this test

because the record demonstrates that (1) the denial of

the Big Stone plant goes only to the extent of the

discrimination, not its existence. Moreover, because the issue

is the referendum that was specific to Lonetree, it is

questionable whether Big Stone has any relevance at all. To

determine whether there was any discrimination, we must look

to the effects on the garbage market as it existed at the time of

the referendum.

48a

legislative approval by the referendum does not further the

legitimate goal of environmental safety, and therefore provides

no local benefits; and (2) a nondiscriminatory alternative is

available because legislative review of the Lonetree facility

may be obtained without a referendum in which the

predominant argument is the imported nature of the garbage at

Lonetree.

In order to survive strict scrutiny under the commerce

clause, South Dakota first must demonstrate that the

referendum on the Lonetree facility provided some locai

benefits. South Dakota identifies environmental protection as

the sought-after benefit. Although the goal of environmental

protection is a permissible one, as we have already discussed,

the referendum on S.B. 169 simply does nothing to advance this

goal. Because there is already one procedure in place to protect

the environment, and this second review provides only an

incremental amount of additional protection, this referendum in

which voters were distracted by distinctly non-environmental

concerns provided no local benefit. South Dakota has not

carried its burden to prove that this referendum resulted in

increased environmental protection.

To survive strict scrutiny, South Dakota must also

demonstrate the lack of a nondiscriminatory alternative to this

referendum under the dual permitting scheme. Things such as

a new administrative agency or more stringent regulations are

possible alternatives, but these were rejected as alternatives to

the initiative by the South Dakota state court in SDDS III.

However, SDDS III addressed only the initiative. SDDS V, 994

F.2d at 493-94. We must look at alternative ways in which this

particular decision regarding legislative approval might have

been made. When the focus is changed fromthe broad focus of

SDDS III to a narrower focus on this particular decision,

nondiscriminatory alternatives emerge. The most obvious

alternative is a legislative discussion in which interstate trade

issues are not the dominant issues discussed. This alternative

may be easily achieved through a fuller discussion of the

49a

environmental issues, so that the record reflects that voters or

legislators might reasonably have considered the environmental

issues. Such an alternative, which merely modifies the contents

of the legislative discussion or the voter pamphlet

accompanying a referred measure, would not be any more

costly than the current procedure. The alternative would more

fully achieve the desired effect of protecting the environment

by forcing consideration of the environmental issues without

the distortions of reasoning that result from the emphasis on

protectionist propaganda.

Thus, because we hold that the referendum provided no

local benefit, and that a nondiscriminatory alternative was

available, we conclude that the referendura fails the required

strict scrutiny. We therefore hold that South Dakota’s

referendum of S.B. 169 violates the dormant aspects of the

commerce clause of the United States Constitution.

Ill. CONCLUSION

We hold that South Dakota’s referral of S.B. 169 violated

the dormant commerce clause. Although facially neutral, the

referendum had a discriminatory purpose and a sufficiently

discriminatory effect to trigger strict scrutiny. Because we find

that the referendum does not appreciably advance any

legitimate local interest, and that nondiscriminatory alternatives

are available to advance South Dakota’s legitimate concerns,

the referendum does not survive strict scrutiny. Accordingly,

the judgment of the district court is reversed and we remand to

the district court with instructions to enter judgment in favor of

SDDS.

50a

United States Court of Appeals,

Eighth Circuit.

SDDS, Inc., Appellee/Cross-appellant,

v.

State of South Dakota, Appellant/Cross-appellee.

Nos. 98-3588, 99-1034, 99-1035.

Order Denying Petition for

Rehearing and for Rehearing En Banc

November 9, 2000

The petition for rehearing en banc is denied. The petition

for rehearing by the panel is also denied.

Chief Judge Wollman took no part in the consideration

or decision of this matter.