The district court granted AGG Enterprises (AGG) a permanent injunction against the city of Beaverton (Beaverton), Oregon and Washington County, Oregon (defendants) enjoining the defendants "from enforcing their trash-hauling regulations against plaintiff . . . AGG."[1] The district court found that § 14501(c) of the Federal Aviation Administration Authorization Act of 1994 (FAAAA)[2] preempted local regulation of "motor carriers"[3] hauling mixed solid waste. The defendants appealed, and the Ninth Circuit reversed, vacated the injunction, and remanded.

AGG collected construction refuse, including loads of mixed solid waste (MSW), which contained garbage and recyclable waste. The MSW that AGG collected consisted of between fifty and ninety percent recyclable materials. The remaining portion was trash. AGG brought its loads of MSW to a material recovery facility that sorted the MSW, recycled the recyclable materials, and disposed of the trash. AGG operated in Beaverton, a city that regulates trash collection by using exclusive franchises. To haul trash in Beaverton or in Washington County, a hauler must have a license or certificate from these defendants. Because AGG did not have a license, Beaverton issued AGG a citation. After Beaverton indicated that it would not take action on AGG's application for a garbage-hauling license, AGG brought suit against the defendants seeking a permanent injunction. The district court granted the injunction, holding that the defendants could not enforce their trash-hauling regulations against AGG because the MSW that AGG hauled was property. Therefore, because the FAAAA limited local regulation of motor carriers hauling property, the FAAAA preempted the defendants' regulation of AGG.

On appeal, the defendants argued that Congress did not intend to preempt local regulation of MSW collection when it passed the FAAAA. The Ninth Circuit agreed. According to the court, federal preemption of local law "may be either express or implied."[4] Congress's intent to preempt can be explicitly expressed in the statute's language or implied through the statute's structure and purpose.[5] The court indicated, however, that a presumption exists against federal preemption,[6] particularly in areas that are traditionally locally regulated, including areas usually controlled by local police power.[7] The court explained that garbage collection typically has been regulated locally, and that the court previously indicated that local regulation was important to protect health and safety in local communities.[8] The court stated that to find that the FAAAA preempted local regulation of MSW collection, it must find a "clear and manifest" congressional intent to preempt.[9]

To determine whether Congress intended to preempt local regulation of hauling MSW, the court examined the text of the FAAAA as well as the Act's structure and purpose. According to section 14501(c) of the FAAAA, a "political subdivision of a State . . . may not . . . enforce a . . . regulation . . . related to a price, route, or service of any motor carrier . . . with respect to the transportation of property."[10] The court pointed out that Congress did not define the word "property" in the statute. Therefore, the court examined the legislative history of the FAAAA to determine whether Congress intended the FAAAA to preempt local regulation of MSW. The court explained that the legislative history indicated that garbage collectors would not be covered by section 14501(c).[11] According to the legislative history, at the time the FAAAA was passed, the Department of Transportation believed that, according to Interstate Commerce Commission (ICC) case law, garbage was not property.[12] Congress believed that section 14501(c) would not cover garbage haulers.[13] According to the Ninth Circuit, however, ICC case law was "equivocal as to whether [garbage] could be 'property'"[14] Nevertheless, the court explained that in determining Congress's intent, it was only important whether Congress believed that the FAAAA would preempt local regulation of garbage at the time it was passed, not whether ICC case law actually found that garbage could be property.

AGG argued that MSW was property under ICC case law and therefore, according to section 14501(c), could not be locally regulated, regardless of Congress's intent at the time of passing the FAAAA. The court rejected this argument, finding that even if portions of the MSW were recyclable and thus might be property, at least ten to twenty percent of the MSW was garbage. Therefore AGG hauled thousands of tons of garbage. The Ninth Circuit did not find a "clear and manifest" intent of Congress to preempt local regulation of garbage hauling, even if the garbage contained recyclables.[15] As AGG's MSW contained a large amount of trash, the court held that Congress did not intend to preempt local regulation of AGG's MSW collection.

The court pointed out that its decision was consistent with the California Court of Appeals' decision in Pleasant Hill Bayshore Disposal, Inc. v. Chip-It Recycling, Inc. (Pleasant Hill).[16] The Ninth Circuit agreed with the Pleasant Hill conclusion that there was "nothing in the language or legislative history of [section 601(c) of the FAAAA] giving the least credence to [the MSW hauler's] claim that Congress intended to make itself the sole authority in a field where local authority has been traditionally accepted as preeminent."[17] The Ninth Circuit reversed the district court's decision, vacated its injunction, and remanded the case.