                              In the

    United States Court of Appeals
                For the Seventh Circuit
No. 18-3051

CHRISTOPHER REGAN and
NORTHWEST INDIANA CREATIVE
INVESTORS ASSOCIATION, INC.,
                                               Plaintiffs-Appellants,

                                v.


CITY OF HAMMOND, INDIANA,
                                                Defendant-Appellee.


        Appeal from the United States District Court for the
         Northern District of Indiana, Hammond Division.
        No. 2:16-cv-00098-JTM — James T. Moody, Judge.



     ARGUED APRIL 3, 2019 — DECIDED AUGUST 19, 2019


   Before WOOD, Chief Judge, and BAUER and ROVNER, Circuit
Judges.
   ROVNER, Circuit Judge. The plaintiffs in this case press a
dormant commerce clause challenge to a local ordinance that
requires a residential property owner who wishes to make
2                                                    No. 18-3051

repairs to the residence either to obtain a license or to hire a
licensed contractor; but a homeowner making repairs to the
single-family residence he or she occupies is exempted from
this requirement. The plaintiffs argue that this scheme discrim-
inates against interstate commerce and to that extent is
contrary to the dormant commerce clause. But the ordinance
draws no distinction between in-state or out-of-state property
owners and imposes no burden on interstate commerce. We
therefore affirm the district court’s entry of summary judgment
against the plaintiffs.
                                I.
    Plaintiff Christopher Regan lives in Cook County, Illinois,
but owns real property in the City of Hammond, Indiana, that
he leases or rents to others. The Northwest Indiana Creative
Investors Association, Inc. (“NICIA”) is a trade association for
real estate investors who likewise own and lease real property
in Hammond. As landlords, Regan and NICIA members
naturally have the need to make periodic repairs and improve-
ments to their Hammond properties. In order to repair or
remodel their properties, the Hammond municipal code
requires that they either obtain a license from the city or hire a
Hammond-licensed general contractor. Hammond, Ind.
Municipal Code §§ 150.15, 150.17. In order to obtain a license,
a general contractor or landlord must, among other things,
submit an application, pass a test and criminal background
check, and pay a fee. (General contractors are subject to
additional requirements and obtain a broader license.) The
code makes an exception for an individual making repairs or
improvements to a private, single-family residence in which he
resides. Any work he performs will be subject to review and
No. 18-3051                                                     3

inspection by the city building commissioner (as would
licensed work), but he need not obtain a license in order to do
the work. §§ 150.15, 150.17.
    Regan and NICIA contend that the license requirement,
coupled with the exemption, impermissibly burdens interstate
commerce by imposing costs on property owners who, like
Regan, do not reside in Hammond which locally-domiciled
homeowners do not have to pay. That burden, they argue, is
inconsistent with the dormant commerce clause. The district
court disagreed and entered summary judgment for
Hammond. Regan v. City of Hammond, Ind., 331 F. Supp. 3d 798
(N.D. Ind. 2018). Judge Moody reasoned that the city’s license
requirement does not facially discriminate against property
owners who do not live in Hammond, does not have a dispa-
rate impact on those owners, and is rationally related to the
city’s interest in public safety. Id.
                               II.
    The commerce clause gives Congress the power to regulate
commerce among the states. U.S. Const. Article I, § 8, cl. 3. This
provision “presumes a national market free from local legisla-
tion that discriminates in favor of local interests.” C & A
Carbone, Inc. v. Town of Clarkstown, N.Y., 511 U.S. 383, 393, 114
S. Ct. 1677, 1683 (1994). The clause therefore comprises not
only an affirmative authorization for Congress to regulate
interstate commerce, but a corresponding restraint on the
power of state and local governments to regulate that com-
merce. Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328, 337–38, 128
S. Ct. 1801, 1808 (2008); Am. Trucking Ass’ns, Inc. v. Mich. Pub.
Serv. Comm’n, 545 U.S. 429, 433, 125 S. Ct. 2419, 2422–23 (2005).
4                                                     No. 18-3051

That restraint is referred to as the dormant commerce clause,
and it precludes states and municipalities from erecting
obstacles to interstate commerce even where Congress has not
regulated. Tenn. Wine & Spirits Retailers Ass’n v. Thomas, 139
S. Ct. 2449, 2459–61 (2019); Comptroller of Treasury of Md. v.
Wynne, 135 S. Ct. 1787, 1794 (2015); Endsley v. City of Chicago,
230 F.3d 276, 284 (7th Cir. 2000). The fact that a state or
municipal law affects interstate commerce in some way is by
itself insufficient to render the law suspect under the com-
merce clause, as almost any local regulation is bound to touch
upon interstate commerce. Nat’l Paint & Coatings Ass’n v. City
of Chicago, 45 F.3d 1124, 1130–31 (7th Cir. 1995). “Dormant
Commerce Clause doctrine applies only to laws that discrimi-
nate against interstate commerce, either expressly or in fact.”
Park Pet Shop, Inc. v. City of Chicago, 872 F.3d 495, 501 (7th Cir.
2017) (emphasis in original) (citing Nat’l Paint, 45 F.3d at
1130–31).
    Our precedents place state and local laws into one of three
categories for purposes of commerce clause analysis, depend-
ing on the degree to which they affect interstate commerce:
(1) laws that expressly discriminate against interstate com-
merce; (2) laws that, although neutral on their face, bear more
heavily on interstate than local commerce; and (3) laws that
may have a mild effect on interstate commerce but in practice
do not give local firms any competitive advantage over firms
located elsewhere. Park Pet Shop, 872 F.3d at 501–02 (citing Nat’l
Paint, 45 F.3d at 1131). A law falling into the first category is
presumed to be almost per se unconstitutional and is subject to
rigorous scrutiny that will allow the law to stand only if it
serves a legitimate governmental interest and there is no
No. 18-3051                                                        5

reasonable non-discriminatory means of furthering that
interest. Park Pet Shop, 872 F.3d at 501 (citing Nat’l Paint, 45
F.3d at 1131); see Davis, 553 U.S. at 338, 128 S. Ct. at 1808; United
Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth.,
550 U.S. 330, 338–39, 127 S. Ct. 1786, 1793 (2007); Or. Waste Sys.,
Inc. v. Dep’t of Environ. Quality of State of Or., 511 U.S. 93,
100–01, 114 S. Ct. 1345, 1351 (1994). A law falling into the
second category is analyzed according to its effect. If the
impact is so strong that the law effectively operates as an
embargo on interstate commerce, it is treated as the equivalent
of a facially discriminatory law and is subject to the same
demanding scrutiny given to such a law. Id. (citing Nat’l Paint,
45 F.3d at 1131). But if the law regulates even-handedly and
only incidentally burdens interstate commerce, then it is
examined under the balancing test set forth in Pike v. Bruce
Church, Inc., 397 U.S. 137, 142, 90 S. Ct. 844, 847 (1970), to
determine whether it is animated by a legitimate public
purpose and, if so, whether the burden the law imposes on
interstate commerce is excessive in relation to that interest.
Park Pet Shop, 872 F.3d at 501–02; see Davis, 563 U.S. at 338–39,
128 S. Ct. at 1808–09; Brown-Forman Distillers Corp. v. N.Y. State
Liquor Auth., 476 U.S. 573, 579, 106 S. Ct. 2080, 2084 (1986). A
law falling into the third category is examined solely to
determine whether it has a rational basis. Park Pet Shop, 872
F.3d at 502 (citing Nat’l Paint, 45 F.3d at 1131–32). The district
court concluded that the Hammond ordinance falls into the
third category and indeed is justified by a rational basis. We
review its conclusion de novo. Legato Vapors, LLC v. Cook, 847
F.3d 825, 828–29 (7th Cir. 2017).
6                                                    No. 18-3051

    The plaintiffs are landlords, and as the ordinance concerns
landlords, it draws no distinction between those who are
domiciled in Hammond (or elsewhere in Indiana) and those
who are not; all landlords are subject to the license require-
ment. So the landlord who lives in Chicago and owns a rental
property in Hammond must obtain a license or hire a licensed
contractor, but so must the landlord who lives next door to his
Hammond rental. The ordinance imposes no impediment or
burden for the non-Hammond landlord that it does not also
impose on the Hammond landlord. There is no disparity in
classification of local versus non-local landlords nor is there a
disparity in how the two are impacted by the ordinance. See
Park Pet Shop, 872 F.3d at 502 (municipal “puppy mill” ordi-
nance that prohibits all large commercial breeders from selling
domestic pets to local pet stores regardless of where breeder is
located neither expressly discriminates against interstate
commerce nor has disparate impact on out-of-state breeders).
    It is only the exception the ordinance makes for occupant
homeowners that causes the plaintiffs to complain that the
ordinance is inconsistent with the dormant commerce clause,
because by definition only a property owner who lives in
Hammond can be an occupant of a Hammond residence. The
occupant can, if he chooses, save himself the expense of
obtaining a license or hiring a licensed contractor to make
improvements to his property; and he is the only property
owner who is given that option. But the exception is tied to
occupancy of the property rather than the owner’s domicile; a
Hammond-based landlord will not qualify for the exception
even if his tenant lives next door to him in the adjoining unit of
a side-by-side duplex.
No. 18-3051                                                   7

    The premise of the plaintiffs’ commerce clause challenge is
that all owners of residential property in Hammond are
participants and competitors in the national housing market,
so that to give an occupant homeowner an exemption from the
license requirement is to discriminate in favor of the occupant
against the non-occupant homeowner, including in particular
the landlord who is not domiciled in Hammond. But occupant
homeowners are not similarly situated with landlords, as the
district court recognized. The owner-occupant of a single-
family home typically is not deriving rental income from his
property, which means that he or she is not in meaningful
competition with landlords. Yes, both own property, and both
may ultimately sell that property in the national market, but
during the term of their ownership, they are using the property
for different purposes. Moreover, the occupant also bears the
consequences of repairs or improvements made to his home in
a way that a landlord does not. Of course, all repairs and
improvements are reviewed by the Hammond building
commissioner for compliance with municipal codes, so one
may presume the alterations by the occupant owner are good
enough to pass inspection; but compliance with local regula-
tions does not ensure that the craftsmanship is sound, effective
in resolving any problems that necessitated repairs, or suffi-
cient to prevent future problems. And as between the occupant
and the landlord, it is the former who will be without heat,
water, a working kitchen, a watertight roof, or a sound
staircase if the repairs or improvements are not made properly.
The occupant and the landlord alike ultimately may suffer the
economic consequences of bad work (a tenant might withhold
rent or abandon the lease), but only the occupant actually
8                                                    No. 18-3051

experiences the deterioration in living conditions with its
attendant hardships and dangers. In the district court’s words,
“While resident homeowners will bear the risk of their own
poor craftsmanship, building contractors and landlords impose
the risk of faulty construction upon current or future tenants.”
331 F. Supp. 3d at 805.
    Given the material distinctions between occupant owners
and landlords, the exception for occupant owners does not
make the ordinance one that discriminates against non-
Hammond property owners, so as to trigger a presumption of
invalidity. “[L]aws that draw distinctions between entities that
are not competitors do not ‘discriminate’ for purposes of the
dormant commerce clause.” Selevan v. N.Y. Thruway Auth., 584
F.3d 82, 95 (2d Cir. 2009) (quoting Town of Southold v. Town of
E. Hampton, 477 F.3d 38, 49 (2d Cir. 2007)); see Gen. Motors Corp.
v. Tracy, 519 U.S. 278, 298–300, 117 S. Ct. 811, 824–25 (1997).
Hammond’s ordinance does not impede interstate commerce
in the sense that it poses an obstacle to non-residents who wish
to invest in Hammond rental properties or imposes a sur-
charge on such non-residents that is not imposed on local,
similarly-situated investors. Nor does it otherwise impose a
disparate burden on non-Hammond landlords so as to trigger
the Pike analysis. As we have said, the ordinance treats all
landlords the same, regardless of whether they are domiciled
in Hammond. Consequently, the law falls into the third
category, and is subject only to rational basis review.
   And for the same reasons that occupant homeowners are
not similarly situated to landlords, the license requirement and
exemption easily survive deferential review. Hammond has an
obvious interest in the safety and habitability of the homes in
No. 18-3051                                                  9

which its residents live, and the ordinance is a legitimate
exercise of its authority to promote that interest. The license
requirement serves to ensure not only that whoever performs
the work, be it the property owner or a contractor, is familiar
with the local code requirements and is therefore capable of
completing work in a sound manner that complies with those
requirements, but that he lacks a criminal background that
may place the property’s owner or occupant in jeopardy of
fraud. Insofar as the exemption for occupant homeowners is
concerned, it is reasonable for the city to think that such
homeowners, who have a keen interest in the adequacy of
repairs and improvements made to their own homes, will also
endeavor to comply with all local requirements.
                             III.
   Hammond’s licensing ordinance does not discriminate
based on the domicile of a homeowner in name or effect and
has the support of a rational basis; it therefore poses no
problem under the dormant commerce clause. The district
court property granted summary judgment to Hammond.
                                                  AFFIRMED
