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SDDS, Inc. v. South Dakota

ELR Citation: 24 ELR 21318
Nos. No. 91-5121, 843 F. Supp. 546/(D.S.D., 01/28/1994) Referendum valid

The court holds that a state referendum that nullified a statute approving the construction and operation of a municipal solid waste facility did not violate the Equal Protection Clause, Commerce Clause, or Due Process Clause of the U.S. Constitution because the facility never had a valid permit. A waste disposal company received a one-year permit to construct and operate the Lonetree facility, and then sought a five-year permit renewal. After the company received the renewal permit and its approval by the state legislature, the South Dakota Supreme Court found that the state's Board of Minerals and the Environment (BME), the agency that issued the permit, lacked adequate findings to support the issuance of the original one-year permit. An environmental group opposing the facility filed petitions with the secretary of state sufficient to refer the statute approving the facility to a referendum. The disposal company filed this action challenging the constitutionality of the referendum under the Equal Protection Clause, Commerce Clause, and Due Process Clause. The court first holds that the disposal company's procedural and substantive due process claims must fail because the company cannot show a property right. The five-year renewal permit was invalid because it was based on an invalid one-year permit, and without a valid permit, the company had no constitutionally protected property interest in operating the facility. The court next holds that the Commerce Clause and Equal Protection Clause are not implicated because the company never had a valid permit. It logically follows that if the legislature was not in a position to grant approval to the facility, then the enabling legislation had no effect, and the referendum also had no effect. The court nonetheless addresses the merits of these claims for the benefit of the appellate court on review.

The court notes that the referendum does not discriminate on its face against interstate commerce because it contains no facial reference to in-state or out-of-state waste or to facilities owned by in-state or out-of-state corporations. Noting that another facility received legislative approval, the court concludes that the referendum does not discriminate against interstate commerce in practical effect. The court finds that the referendum furthered the legitimate local purpose of protecting South Dakota's environment and natural resources and concludes that the incidental burden on interstate commerce did not clearly exceed the local benefits. The court further concludes that the company failed to provide the proof necessary to sustain its equal protection claim. The electorate possessed evidence, in the form of public administrative hearings as well as other sources of information about Lonetree, from which they reasonably could have believed that the referendum would further the protection of South Dakota's environment.

[A prior decision in this litigation is published at 23 ELR 21285.]

Counsel for Plaintiff
Edward T. Lyons Jr., David E. Driggers
Jones & Keller
1625 Broadway, Ste. 1600, Denver CO 80202
(303) 573-1600

Counsel for Defendants
Mark W. Barnett, Roxanne Giedd, Ass't Attorneys General
Attorney General's Office
500 E. Capitol St., Pierre SD 57501
(605) 773-3215