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City Level Waste Management Franchise Rights: Rancho Mirage Court Case Summary

| Written by Elizabeth Walsh | No Comments | Updated on Jun 13, 2017 The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/rancho-mirage-court-case-summary/

Overview

Twenty-three years ago the Supreme Court of California reviewed the California Integrated Waste Management Act of 1989 for the first time in City of Rancho Mirage and Waste Management of the Desert v. Palm Springs Recycling Center, Inc. In a 5-2 decision the court ruled that the Act, which allows the city to give exclusive franchise rights for waste management, does not prohibit people in the franchisee’s jurisdiction from selling their recyclable materials to other companies. The argument behind this decision is that recyclables are not waste until their owner discards them. If recyclables are being sold, this indicates that they are not discarded and therefore do not fall under city waste management authority.

Facts of the Case

The Act of 1989 authorized California’s cities to grant exclusive franchise rights for authority over solid waste management services if exclusive rights are necessary to promote public health, safety and wellbeing. The Act also set goals and regulations for city waste management efforts. Each locality that provided waste management services was required to engage in source reduction, recycling, and composting. Also, by 2000, each local waste authority was responsible for redirecting 50% of all solid waste generated.

In light of this Act, the City of Rancho Mirage formed a two-part agreement with Waste Management of the Desert Inc. (Waste Management) consisting of a “Refuse Collection Agreement” and a “Recycling Agreement.” Only the later was disputed in this case. The Recycling Agreement gave Waste Management “the obligation and exclusive right to collect and remove all specified materials that are segregated and placed in separate recycling containers at the curbside on public streets or adjacent to multifamily complexes or in bins at locations designated by commercial establishments. Subject to specified limitations, Waste Management is authorized to retain the revenue from the sale of recyclable materials.”

The agreement led to the passing of Ordinance No. 8.12.010, which enforced Waste Management’s authority. The ordinance prohibited anyone other than Waste Management from collecting or disposing of any refuse accumulated in the city.

After the passage of this ordinance, Palm Springs Recycling was collecting recyclable materials from commercial customer in the city. Waste Management sued Palm Springs on the grounds that their collection violated the ordinance, and ultimately the Act. The question in this case was whether or not the agreement and ordinance prohibit the sale of recyclables to outside companies and whether or not this prohibition was legal under the Act.

The Decision

Justice Marvin R. Baxter wrote the opinion of the Court, stating that the ordinance cannot be used to limit the sale of recyclables to companies other than Waste Management. The ordinance was upheld, but its applicability was restricted. Justice Baxter argued that under the Act, Waste Management could only be granted an exclusive franchise to handle solid waste. Property does not become solid waste until it is discarded. To discard something is to throw it away without compensation because waste is defined as having no economic value to its owner. Any waste that is disposed of is subject to Waste Managements authority under the ordinance. However, valuable property that is sold is not yet waste and is, therefore, not subject to Waste Management’s authority. Justice Baxter found that this was consistent with the Act’s intended purpose of reducing waste, because sale of recyclables will ultimately help to decrease the volume of waste in the waste stream.

Why it Matters

This case is highly significant for the status of recyclables. It established recyclable materials as valuable property, and determined that cities waste management authorities cannot restrict an owner’s right to sell this property simply in virtue of it being recyclable. A city cannot restrict recycling efforts to those it oversees, opening the door to more recycling markets even in the context of an exclusive franchise agreement.

Another significant outcome of this case is that it limited the bargaining power of cities in forming an exclusive franchise agreement with regard to waste management. Cities cannot promise a company guaranteed access to the most valuable recyclables because those recyclables may be sold to outside companies and this cannot be restricted.

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Elizabeth Walsh

About Elizabeth Walsh

Elizabeth Walsh is a research intern for the Waste to Wealth Initiative for the summer 2017.  She is preparing a chronology of the US recycling movement, updating recent accomplishments of ILSR’s Working Partners and researching the impact of unit pricing (Pay As You Throw) for waste services in selected cities. Ms. Walsh will graduate from Lafayette College in June 2018 with a double major in economics and philosophy along with a government minor.

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