WASTE MANAGEMENT OF THE DESERT, INC., et
al., Plaintiffs and Respondents, v. PALM SPRINGS RECYCLING CENTER, INC.,
Defendant and Appellant.
No. S029150.
SUPREME COURT OF CALIFORNIA
7 Cal. 4th 478; 869 P.2d 440; 28 Cal. Rptr. 2d 461; 1994 Cal.
LEXIS 1217; 94 Cal.
Daily Op. Service 2306; 94 Daily Journal DAR 4255
March 31, 1994, Decided
PRIOR HISTORY: Superior
Court of
Riverside County,
No. I-64239, Ross G. Tharp, Judge.
*
* Retired judge of the
San Diego Superior Court sitting under assignment by the Chairperson of the
Judicial Council.
DISPOSITION: The judgment of the Court of Appeal is affirmed with one
modification.
CASE SUMMARY
PROCEDURAL
POSTURE: Plaintiff waste company
challenged a judgment from the appellate court (California), which reversed the trial
court's grant of injunctive relief to plaintiff, in plaintiff's action
regarding defendant recycling company's ordinance and agreement violations
relating to the collection of recyclable materials.
OVERVIEW: Plaintiff waste company entered into an agreement regarding
the collection and disposal of waste within a city's limits. The agreement also
contained a provision granting plaintiff the exclusive right to collect all
recyclable materials. Defendant recycling company sent trucks into the city to
collect recyclable materials, plaintiff and city demanded defendant's
cessation, and sought a preliminary and permanent injunction prohibiting
defendant from collecting recycling materials within the city. Defendant
contended the city exceeded its police power by enacting an ordinance regarding
the removal of waste and improperly entered into an agreement with plaintiff.
The trial court granted injunctive relief and the appellate court reversed
pursuant to the California Integrated Waste Management Act of 1989 (the Act) Cal.
Pub. Res. Code § 40059(a)(2). The court affirmed the appellate court's
judgment with one modification. The court held that the Act did not allow an
exclusive franchise for the collection of recyclable not discarded by their
owner. The court reasoned the legislature did not intend for the Act to cover
items that were not discarded by their owners.
OUTCOME: The court affirmed the appellate court's judgment reversing the
trial court's injunctive relief to plaintiff waste company, in plaintiff's
action regarding defendant recycling company's ordinance and agreement
violations relating to the collection of recyclable materials. The court held
that defendant could collect recyclable materials, so long as they were not
discarded by their owners and, therefore, did not constitute waste.
CORE
TERMS: recycling, solid waste
handling, waste management, recyclable materials, exclusive franchise,
discarded, collection, solid, disposal, recyclable, integrated, discard,
dispose, selling, discarding, ordinance, franchisee, entity, municipality's,
waste stream, police power, authorize, reduction, customer, italics, recycling
program, processing, franchise, landfill, market value
SUMMARY:
CALIFORNIA
OFFICIAL REPORTS SUMMARY
A city and a waste disposal company with whom the city had an exclusive
franchise agreement for the collection and disposal of waste sought to enjoin a
recycling company that serviced large commercial customers from conducting its
business within the city, and the recycling company cross-complained. The trial
court entered judgment for the city and the waste disposal company, both on
their complaint and on the recycling company's cross-complaint. (Superior Court of Riverside County,
No. I-64239, Ross G. Tharp, Judge.
*) The Court of
Appeal, Fourth Dist., Div. Two, No. E009910, reversed the judgment, holding
that the California Integrated Waste Management Act of 1989 (Pub.
Resources Code, § 40000 et seq.) did not authorize the city to grant an
exclusive franchise for the collection and removal of "recyclable
materials" that have not been placed into separate containers maintained
by the city or its authorized waste collector or that otherwise are not "discarded"
by the owner.
* Retired judge of the
San Diego Superior Court sitting under assignment by the Chairperson of the
Judicial Council.
The Supreme Court affirmed the judgment of the Court of Appeal, but modified it
insofar as it reflected the view that the owner of recyclables can discard them
as the owner wishes, and thus directed the Court of Appeal to remand the matter
to the trial court with directions to issue a permanent injunction and/or a
writ of mandate in favor of the recycling company, prohibiting the city from
enforcing the ordinance either by criminal prosecution or by injunctive relief
against the company for engaging within the city's boundaries in the business
of collecting, receiving, transporting, segregating, recycling, and disposing
of recyclable materials that the company acquired for compensation from
commercial establishments. The court held that the owner of undiscarded
recyclables is not required to transfer them to the holder of an exclusive
franchise under the act and that, therefore, the exclusive franchise agreement
between the city and the waste disposal company was unenforceable under the act
to the extent the franchise purported to include recyclable materials that have
not become "waste" within the meaning of the act. Although Pub.
Resources Code, § 40059, subd. (a)(2), allows a local agency to award an
exclusive franchise for "solid waste handling" services, recyclable
material with a market value to its owner is not "waste" as defined
by Pub.
Resources Code, § 40191, subd. (a), until it is discarded. Thus, if an
owner segregates recyclable or otherwise useful materials and sells them, he or
she has not discarded them and they do not become waste. (Opinion by Baxter,
J., with Lucas, C. J., Panelli, J.,
** Kennard, J.,
and Cottle, J.,
+
concurring. Separate dissenting opinion by George, J., with Mosk, J.,
concurring.)
** Retired Associate
Justice of the Supreme Court sitting under assignment by the Chairperson of the
Judicial Council.
+
Presiding Justice, Court of Appeal, Sixth Appellate District, assigned by the
Acting Chairperson of the Judicial Council.
COUNSEL:
Crandall & Traver, Lynn D. Crandall and Lisa A. Garvin for Defendant and
Appellant.
Flanigan & Flanigan, Timothy H. Flanigan, Terrance W. Flanigan, Ropers,
Majeski, Kohn, Bentley, Wagner & Kane, Michael J. Brady, Susan S.
Ellenberg, Sedgwick, Detert, Moran & Arnold, Sean H. Gallagher, Livingston
& Mattesich, James M. Mattesich, Carol L. Livingston, Lisa L. Halko,
Pillsbury, Madison & Sutro, Kevin M. Fong, Sharon M. Solomon, Stone &
Moore and John Douglas Moore as Amici Curiae on behalf of Defendant and
Appellant.
Jean Leonard Harris, J. Scott Zundel, Schlecht, Shevlin & Shoenberger and
Jon A. Shoenberger for Plaintiffs and Respondents.
Hallgrimson, McNichols, McCann & Inderbitzen, Harvey E. Levine, John T.
Schreiber and Claudia J. Martin as Amici Curiae on behalf of Plaintiffs and
Respondents.
Shute, Mihaly & Weinberger, E. Clement Shute, Jr., Richard S. Taylor, Astor
& Phillips, Z. Harry Astor and John K. Astor as Amici Curiae.
JUDGES:
Opinion by Baxter, J., with Lucas, C. J., Panelli, J., Kennard, J., and Cottle,
J.,* concurring. Separate dissenting opinion by George, J., with Mosk, J.,
concurring.
OPINION BY: BAXTER, J.
OPINION
[*481]
[**440] [***461]
HN1The
California Integrated Waste Management Act of 1989 (the Act) authorizes cities
to grant exclusive franchises for solid waste
[**441]
[***462] handling services. (Pub.
Resources Code, § 40059, subd. (a)(2).) The question is whether this
authority extends so far as to prohibit the owner of recyclable materials from
selling them to someone other than the exclusive franchisee. Whether the
Legislature has authorized such franchises is solely a question of statutory
construction.
We hold the Act does not allow an exclusive franchise for the collection of
recyclables not discarded by their owner. As we shall explain, the Act
[*482] authorizes
exclusive franchises only for "solid
waste handling." (Italics
added.) An item that is sold is not discarded and thus does not become
"waste" subject to an exclusive franchise.
The exclusive franchise agreement in this case between plaintiffs City of
Rancho Mirage (City) and Waste Management of the Desert, Inc. (Waste
Management) is therefore invalid and unenforceable to the extent the exclusive
franchise purports to include recyclable materials that are not waste under the
Act. The trial court erred in enjoining defendant Palm Springs Recycling
Center, Inc. (Palm Springs Recycling) from collecting such recyclable materials
within City limits.
FACTS
The City contracted with Waste Management for the collection and disposal of
residential and commercial waste within the City limits (the Agreement). The
Agreement consists of two parts, a "Refuse Collection Agreement" and
a "Recycling Agreement." Under the Refuse Collection Agreement, Waste
Management has the obligation and exclusive right to collect, receive,
transport, segregate, recycle, and dispose of residential and commercial refuse
of the type customarily deposited by residents and businesses in collection
containers or areas for pickup and disposal. The Refuse Collection Agreement
does not prohibit any person from transporting that person's own refuse to a
legal dump site.
The Recycling Agreement provides that Waste Management has 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.
When it entered into the Agreement, the City adopted ordinance No. 8.12.010
(Ordinance), providing that "[a]ll garbage and rubbish accumulated in the
city shall be collected, conveyed and disposed of by the city or by any person
with whom the city has a contract for the collection, removal, and disposal of
ashes, waste matter, garbage and rubbish. Except as otherwise provided in this
chapter, no person, other than the city or its contract agent, shall collect,
convey over any of the streets or alleys of the city, or dispose of any refuse
accumulated in the city."
Under its exclusive franchise, Waste Management established a citywide
recycling program for single-family residences, multifamily complexes, and
commercial establishments.
[*483] In
May 1991, the City and Waste Management sued Palm Springs Recycling, alleging
that beginning in 1990 Palm Springs Recycling "had been sending trucks
into [the City] on a regular basis to collect recyclable material from large
commercial customers" in violation of the rights of the City and Waste
Management under the Agreement and the Ordinance, and had refused to comply
with demands made by the City that Palm Springs Recycling cease those
activities. The complaint sought preliminary and permanent injunctive relief
prohibiting Palm Springs Recycling from collecting recyclable materials within
the City.
Palm Springs Recycling admitted it had sent trucks into the City on a regular
basis to collect recyclable materials from commercial customers and had
continued to solicit new customers within the City's boundaries. It denied,
however, engaging in illegal activities or interfering with plaintiffs' rights
under the Agreement, asserting as affirmative defenses that: (1) The City had
acted in excess of its police power by enacting the Ordinance and entering into
the Agreement; (2) the Agreement constituted an illegal combination in
restraint of trade under
[**442] [***463] Business
and Professions Code section 16600 et seq.; and (3) the Ordinance and
Agreement, as construed by plaintiffs, constituted an invalid taking of
property in violation of the Fifth
Amendment to the United States Constitution and article
I, section 19 of the California Constitution.
Palm Springs Recycling also filed a cross-complaint against plaintiffs: (1)
essentially reasserting the affirmative defenses set forth in the answer to the
complaint; (2) seeking an order enjoining Waste Management from providing
recycling services to residents of the City at less than cost and enjoining the
City from enforcing the Ordinance and the Agreement as they related to
recycling and the collection of recyclable materials; and (3) requesting
related affirmative relief.
The City and Waste Management alleged as affirmative defenses to the
cross-complaint that the Ordinance and Agreement were authorized by the Act and
that the Agreement and enforcement of the Ordinance against Palm Springs
Recycling were within the City's police power.
The trial court granted plaintiffs' application for a preliminary injunction.
The court entered judgment for plaintiffs both on their complaint and on
defendant's cross-complaint, enjoining Palm Springs Recycling from placing bins
or other receptacles within the City for the purpose of collecting recyclable
materials and from collecting or removing recyclable materials from within the
City. (The judgment did not specifically define the term
[*484]
"recyclable materials," but the context makes clear the term was
intended to correspond to the use of the same term in the exclusive franchise
contract. Palm Springs Recycling has not suggested the recycling activities
enjoined by the judgment included the recycling of materials other than those
that Waste Management must recycle under the Agreement.)
The Court of Appeal reversed the judgment. The court held the Act does not
authorize the City to grant an exclusive franchise for the collection and
removal of "recyclable materials" that have not been placed into
separate containers maintained by the City or its authorized waste collector or
that otherwise are not "discarded" by the owner. The court relied on Public
Resources Code section 41952's provision that "[n]othing in this chapter
limits the right of any person to donate, sell, or otherwise dispose of his or
her recyclable materials." The court concluded that, until the generator
of recyclable materials discards them into the specified bins, the owner
retains control over the materials' disposition and is free to have them
collected by a recycling enterprise of the owner's choice. The court further
held the City's police power, apart from the Act, did not authorize the City to
restrict recycling services to the waste collection enterprise exclusively
designated by the City.
DISCUSSION
CA(1a)(1a) The Act sets
forth a comprehensive statewide program for solid waste management. (Pub.
Resources Code, § 40000 et seq.) (All further section references are to the
Public Resources Code unless otherwise noted.) No one disputes that the Act
allows a local agency to award an exclusive franchise for "solid
waste
handling" services. (§
40059, subd. (a)(2), italics added.) The question is whether property with
a market value to its owner--for example, a recyclable material--is
"waste" within the scope of the Act and its exclusive franchise
provision. We conclude this property is not "waste" until it is
discarded. This construction encompasses two concepts--value and
discarding--that in this context must be considered in relation to one another.
1.
ECONOMIC VALUE TO THE OWNER
"The concept of market value is perhaps most clearly stated in the poetic
axiom that, 'The worth of a thing, is the price it will bring.' " (
Union
Pacific R.R. Co. v.
State Bd. of Equalization (1989) 49 Cal.3d 138,
148 [260 Cal.Rptr. 565, 776 P.2d 267], quoting 1 Bonbright, Valuation of
Property (1st ed. 1937) p. 15.) If the owner of a material can sell it, perhaps
for the reason that it is recyclable, it has an economic (i.e., market) value
to its owner.
[*485]
The Act's very title, the California Integrated
Waste Management Act of
1989, and its repeated references to "solid
waste,"
"solid waste handling," "recycling of solid
wastes,"
and the like strongly indicate the
[**443]
[***464] Legislature was concerned with just
what it said--
waste--and not with materials of economic value to their
owner. The Act's own definition of "solid waste" further supports the
view that valuable recyclables that have not been discarded are not waste.
"Solid waste" is defined as "all putrescible and nonputrescible
solid, semisolid, and liquid wastes, including garbage, trash, refuse, paper,
rubbish, ashes, industrial wastes, demolition and construction wastes,
abandoned vehicles and parts thereof, discarded home and industrial appliances,
dewatered, treated, or chemically fixed sewage sludge which is not hazardous
waste, manure, vegetable or animal solid and semisolid wastes, and other
discarded solid and semisolid wastes." (§
40191, subd. (a).) This definition hardly connotes the notion of valuable
materials.
CA(2)(2) The commonly
understood meaning of "waste" is something discarded "as
worthless or useless." (Amer. Heritage Dict. (1985) p. 1365, col. 1; 19
Oxford English Dict. (2d ed. 1989), p. 958, col. 1.) If the owner sells his
property--that is, receives value for it--the property cannot be said to be worthless
or useless in an economic sense and is thus not waste from the owner's
perspective. Conversely, if the owner voluntarily disposes of the property
without receiving compensation or other consideration in exchange--that is,
throws it away--the obvious conclusion is that the property has no economic
value to the owner. The concept of value is in this sense related to the manner
in which the property is disposed of.
2.
VALUABLE MATERIALS NOT DISCARDED
CA(1b)(1b) The Act's
definition of waste also reflects the traditional view that waste--at least for
purposes of its collection--is material that has been
discarded by its
owner. Section
40191, subdivision (a) defines solid waste as being several enumerated
types of materials and "
other discarded solid and semisolid
wastes." (Italics added.) The restrictive modifier "other
discarded"
plainly refers to all the enumerated materials in the statute, thereby meaning
that an item is not waste until it is discarded.
The Court of Appeal also relied heavily on this statutory definition of
"waste" in concluding that "only
discarded waste
materials become solid waste subject to 'handling' " under the Act.
Plaintiffs object to this approach, contending it would eviscerate the Act
because owners could discard all their property--recyclable and otherwise--as
they see fit and thereby render an exclusive solid waste handling franchise a
nullity as a practical matter. In
[*486] other words, the Court of Appeal
opinion might be read to mean that a property owner could decide unilaterally
with whom he will discard his waste. If three competing waste handlers (the
exclusive franchisee and two others) placed their respective receptacles at the
owner's curbside, he could put his waste into whichever container he chooses.
Perhaps the Court of Appeal did not intend that result, but its opinion might
be read as suggesting as much and, if so, we believe this result would be
inconsistent with the Act's apparent intent. If, however, the concept of being
discarded is properly understood, this perceived problem is easily avoided.
This returns us to the concept of value. Property that is sold for value--for
example, a recyclable--is not "discarded" under any traditional
understanding of the term.
CA(3)(3)
"Discard" means "to throw away." (Amer. Heritage Dict. (2d
college ed. 1982) p. 402, col. 1.) It is not synonymous with the broader term
"dispose," which means "To transfer or part with, as by giving
or selling." (Id., at p. 407, col. 2.) A homeowner, for example, can
dispose of used furniture, clothing, or automobiles by discarding them or by
selling them, but either method of disposition necessarily precludes the other.
If he sells the property, he cannot discard it; and if he discards it, he
cannot sell it. That "discard" connotes throwing away or abandoning
has been well recognized in cases dealing with waste and related issues. (
American
Min. Congress v.
U.S. E.P.A. (D.C. Cir. 1987) 824 F.2d 1177, 1184
[U.S. App.D.C. 197];
Reading
Co. v.
City of Philadelphia (E.D. Pa. 1993) 823 F.Supp. 1218,
1236-1237;
Carothers
v.
Capozziello (1990)
215 Conn. 82 [574 A.2d 1268, 1291]; Darling
Delaware Corp. v.
District of Columbia (D.C. 1977) 380 A.2d 596, 597;
Ticonderoga
Farms v.
County of Loudoun (1991) 242 Va. 170 [409 S.E.2d 446, 449].)
[**444] [***465]
CA(1c)(1c) The Court of
Appeal opinion did not reflect the distinction between selling and discarding.
Perhaps an example will illustrate. Assume that, as in this case, there is an
exclusive franchise. A property owner throws his recyclables into the
receptacle provided by the franchisee and does so without receiving
compensation. He has plainly discarded his property, and it is thus waste under
the Act. Could he instead throw the property into the bin of a competing waste
hauler without receiving compensation? No, because by disposing of the property
without receiving compensation, he has discarded the property and thereby
rendered it waste that is subject to the exclusive franchise. If, however, he
is paid for the material by the franchisee's competitor, the owner has sold the
property and thus has not discarded it, so it has not become waste.
An especially relevant example of the distinction between selling and
discarding is found in
[*487] Darling
Delaware Corp. v.
District of Columbia, supra, 380 A.2d 596, in
which a company that purchased and transported meat fat and bones from grocery
stores and markets and then sold them for processing into other products, e.g.,
tallow, soup, and margarine, was charged with hauling solid waste without a
license. The question was whether the materials were waste. As in the present
case, the statute defined waste as being "discarded materials." The
court relied on the traditional meaning of "discard." "It
'indicates dispensing with, letting go of, getting rid of as not immediately
useful.' " (
Id.,
at p. 597, quoting Webster's Third New Internat. Dict. (1971).) The court
then concluded, "At no point in the chain of purchase and sale of these
animal by-products were they ever discarded. The record reflects that they were
either sold by grocery stores directly to a few retail customers or frozen for
sale to large buyers such as appellant. Appellant promptly transported them to
plants in New York
where they were resold for processing into other useful products. Since these
materials were never thrown away as not immediately useful, they cannot be said
to have constituted waste . . . ." (
Id.,
at p. 598, fn. omitted.) The same analysis obtains in this case. If an
owner segregates recyclable or otherwise useful materials and sells them, he
has not discarded them and they do not become waste.
The view that all items enumerated in section
40191, subdivision (a) are waste, regardless of their value and whether
they have been discarded, is further called into question by many of the types
of items enumerated. For example, the statute refers to "paper." This
can refer to all paper, however, only if the term is taken out of context and
without consideration of value or the statute's stated limitation that it
applies only to discarded materials. A piece of elaborate origami, a
collector's autograph collection, or a watercolor painting are each
indisputably paper, but we doubt anyone would seriously contend such an item is
waste and that its owner cannot keep it or sell it as he sees fit. The obvious,
intuitive, and correct response to the contention would be that the property
has value and that the owner has not discarded the property if he sells it.
That is, the property has not become waste.
CA(4)(4) The tension
between plaintiffs and the Court of Appeal can be eliminated by relying on the
distinction between selling and discarding. The Court of Appeal was correct
that property does not become waste under the Act until discarded, but
incorrect in suggesting (perhaps inadvertently) that the owner can
discard
the property as he sees fit. Discarding is governed by the Act. Selling and
other methods of disposition by which the owner receives or donates the value
of the recyclable materials are not discarding and are not subject to the Act.
The fundamental purpose of the Act is to reduce the amount of material entering
into the waste stream. The buying
[*488] and selling of materials in the
marketplace is inapposite to that purpose because those materials remain in
circulation and do not enter into the waste stream.
CA(1d)(1d) The proper rule
is this: If the owner of property disposes of it for compensation--in common
parlance, sells it--it is not waste because it has not been discarded. The
owner is not required under the Act to transfer this property to the exclusive
franchisee. But, consistent with the purpose of the Act, an owner cannot
discard
property as he sees
[**445] [***466] fit. Discarding the property renders the
property waste and subjects it to the Act.
3.
THE OWNER'S RIGHT TO SELL RECYCLABLES
CA(5)(5) If one accepts
the general proposition that an owner has a right to sell his property for
value, the question then becomes whether a different rule should apply to a
particular type of property--property defined as recyclable materials in the
Recycling Agreement between the City and Waste Management. Under plaintiffs'
view, a special rule should apply to recyclables in light of the statutory
definitions of solid waste handling and recycling. We read these provisions
differently.
"Solid waste handling" is defined as "the collection,
transportation, storage, transfer, or
processing of solid wastes."
(§
40195, italics added.) "
Processing" is, in turn, defined
as "the reduction, separation, recovery, conversion, or recycling of
solid
waste." (§
40172, italics added.) Put simply, solid waste handling includes
recycling--of
solid waste. If, as explained above, the owner does not
discard his property, it does not become waste in the first instance. Thus,
even if the property might be viewed as a feasibly recyclable
material,
it is not necessarily a recyclable
waste. The distinction is significant
because only the recycling of
waste is included within the Act's
definition of solid waste handling and, in turn, the provision allowing
exclusive franchises.
Plaintiffs also point to section
40180's definition of "recycling" as "the process of collecting,
sorting, cleansing, treating, and reconstituting
materials that would
otherwise become solid waste, and returning to the economic mainstream in the
form of raw material for new, reused, or reconstituted products . . . ."
(Italics added.) Perhaps plaintiffs are relying primarily on the word
"material" and concluding that all recyclable materials are subject
to an exclusive franchise even if they do not become waste. If so, we disagree.
Section
40180's reference to materials is merely an acknowledgment of the reality
that, as a technological matter,
materials are capable of being
recycled. The provisions, however, that define solid waste handling
[*489] refer only to
"recycling of solid
waste," not to the recycling of solid
materials.
(§
40172 and 40195,
italics added.) If the statutes were worded otherwise, the mere fact that
something is capable of being recycled would render it subject to an exclusive
franchise, thereby prohibiting the owner from selling it.
Moreover, section
40180 is itself consistent with the view that only waste is subject to the
Act. The section refers to "materials that
would otherwise become solid
waste." (§
40180, italics added.) If an owner discards property, it enters into the
waste stream if not recycled. But, if a material is sold, it is not a material
"that would otherwise become solid waste." As explained above, it
becomes waste only when discarded. Thus, if an owner sells an item, it does not
enter the solid waste stream, the reduction of which is the fundamental purpose
of the Act.
CA(1e)(1e) The injunction
in this case is directed at a commercial recycling activity, but the logic of
plaintiffs' view would extend inexorably to noncommercial activity as well, for
example, a school newspaper drive, a youth group's gathering of empty soda pop
containers, or clothing donations to the Salvation Army. (Indeed, even gifts
from one individual to another would be suspect, for example, a person who
gives scrap metal to a sculptor of welded art.) The items collected in such
activities are often recyclable
materials. Nothing, however, in the
language or legislative history of the Act suggests the Legislature intended to
eliminate gifts to charity or gifts between friends. As with items that are
sold, gifts cannot be fairly said to have entered the solid waste stream.
Moreover, a gift of valuable property, like a sale of such property, is a
transfer of value and thus cannot properly be characterized as
"discarding" under the Act.
In short, if the owner of recyclable materials
discards them into the
solid waste stream, they become solid waste subject to the Act, and an
exclusive franchisee would have the right to collect that waste in accordance
with its franchise agreement. If, however, the owner disposes of the
recyclables for compensation--in common parlance, sells them--the recyclables
are not discarded and do not become waste.
[**446] [***467]
We therefore hold that the owner of undiscarded recyclables is not required to
transfer them to the holder of an exclusive franchise under the Act. The
Recycling Agreement between plaintiffs
City and Waste Management
is unenforceable under the Act to the extent the franchise purports to include
recyclable materials that have not become "waste," as we have
construed the term.
[*490]
Plaintiffs contend Palm Springs Recycling is seeking "to skim the cream of
the recycling business" by collecting only the more commercially valuable
materials and that a comprehensive recycling program cannot be economically
sustainable absent an exclusive franchise that includes recyclable materials.
This misses the mark in two respects. First, it suggests that Palm Springs
Recycling is somehow taking something of value from Waste Management. Not so.
The "cream" belongs to the owner of the recyclable material. Second,
the contention is better addressed to the Legislature. Our holding is based on
the Act as it is written, not on a different, perhaps broader, version that
could have been, or still may be, enacted.
Finally, we address plaintiffs' additional argument that the City's award of
the exclusive franchise was a valid exercise of the police power. This argument
is not clearly presented, but it seems to have two, perhaps three, aspects.
First, the focus of the argument is the state's police power. In light of our
conclusion that the Act does not support the exclusive franchise in this case,
whether the state constitutionally could have framed the Act to allow the
franchise is beside the point.
Second, plaintiffs also assert, albeit cryptically and only in passing, that
the exclusive franchise is a valid exercise of the City's own police power.
Plaintiffs seem to suggest the City properly exercised that power under the
Act. The argument necessarily fails because, as we have explained, the Act does
not itself authorize the franchise to extend to nondiscarded recyclables.
Third, plaintiffs also suggest the City had the police power independent of the
Act to award an exclusive franchise for the collection of undiscarded
recyclables. We decline to decide the correctness of the Court of Appeal's
determination of that issue. (Cal.
Rules of Court, rule 29.2(a).) The primary focus in this court has been the
scope of the City's power
under the Act. And, the question of the City's
own police power raises the important issue of whether the comprehensive Act
has preempted any power the City might otherwise have had.
Under our construction of the Act, we need not address Palm Springs Recycling's
other arguments.
DISPOSITION
The judgment of the Court of Appeal is affirmed with one modification. The
court directed the trial court to issue an injunction prohibiting the City from
enforcing the Ordinance against Palm Springs Recycling with respect to
"recyclable materials [which] have not been turned over to City or its
[*491]
agent as discussed in this opinion." This was consistent with the Court of
Appeal's view that the owner of recyclables can discard them as it wishes. As
we have explained, our view is narrower--that, if the materials are
"discarded," as we have construed the term, they are subject to the
exclusive franchise.
To accommodate this difference, the judgment of the Court of Appeal is affirmed
with directions to remand this matter to the trial court with directions to
issue a permanent injunction and/or writ of mandate in favor of defendant Palm
Springs Recycling prohibiting the City from enforcing the Ordinance either by
criminal prosecution or injunctive relief against defendant for engaging within
the City's boundaries in the business of collecting, receiving, transporting,
segregating, recycling, and disposing of recyclable materials that are acquired
for compensation by Palm Springs Recycling from commercial establishments.
Defendant shall recover its costs on appeal.
[**447] [***468]
Lucas, C. J., Kennard, J., Panelli, J., and Cottle, J., concurred.
DISSENT BY: GEORGE, J.
DISSENTI respectfully dissent.
In April 1990, the City of Rancho Mirage entered into an exclusive franchise
agreement with Waste Management of the Desert, Inc. (Waste Management), under
which Waste Management agreed to provide specified waste disposal and recycling
services to all of the city's residents and commercial entities, at regulated
rates, and the city, in return, agreed to authorize only Waste Management to
provide such services within the city's boundaries. Shortly thereafter, Palm
Springs Recycling Center, Inc. (Palm Springs Recycling), a competing commercial
recycling enterprise, began sending its trucks into the city on a regular basis
to collect recyclable material from large commercial customers, in violation of
Waste Management's rights under the exclusive franchise agreement. In response,
the city and Waste Management sought injunctive relief from the trial court,
which granted an injunction prohibiting Palm Springs Recycling from engaging in
recycling services within the boundaries of the City of Rancho Mirage in violation of the exclusive
franchise agreement.
The majority overturns the trial court injunction, concluding that the City of
Rancho Mirage lacked authority to enter into an exclusive franchise
[*492] agreement for
recycling services, insofar as that agreement limited the right of competing
recycling companies to purchase and collect designated recyclable materials
within city limits. Although the majority acknowledges that, under the
California Integrated Waste Management Act of 1989 (the Act), the Legislature
explicitly has authorized municipalities to enter into exclusive franchise
agreements for "solid waste handling services," the majority concludes
that the municipality's authority under this legislation does not extend to
"recyclable material" that has a market value and that the owner
wishes to sell to a commercial entity other than the exclusive franchisee.
As I shall explain, I believe the majority's interpretation of the relevant
legislation is clearly incorrect and will frustrate, rather than further, the
important purposes of the Act by excluding a significant proportion of
recyclable material from its operation. A glaring omission of the majority is
its failure to acknowledge the fundamental legislative policies and objectives
of the 1989 legislation--the promotion of "
integrated waste
management"--and the various components of the Act designed to accomplish
these policies and objectives. Construing the statutory scheme as a whole, I
believe it is clear that the Act authorizes the exclusive franchise agreement
at issue in this case, and that the trial court did not err in enjoining the
commercial activities of Palm Springs Recycling that violated the agreement,
including the purchase and collection of materials that in the past would have
been discarded as waste, but that now have some market value because of their
recycling potential.
I
The Act comprises a comprehensive program for solid waste management throughout
the state, reflecting the legislative concern that ever-increasing amounts of
disposable waste, combined with diminishing waste disposal capacity, pose a
threat of crisis proportion to the environment and the public health and welfare,
presenting an "urgent need" for an "aggressive new integrated
waste management program." (Pub.
Resources Code, § 40000; see Assem. Natural Resources Com. Rep., Integrated
Waste Management: Putting a Lid on Garbage Overload (1988) p. i. ["Current State
solid waste management policy is becoming increasingly ineffective in managing California's solid waste
and is potentially harmful to public health and the environment."]
[hereafter Assembly Report].)
1
FOOTNOTES
1
The Act incorporates in substantial part the provisions of its predecessor
statutory scheme, the Solid Waste Management and Resource Recovery Act of 1972,
formerly contained in the Government Code, the Health and Safety Code, and the
Revenue and Taxation Code, the provisions of which were repealed or recodified
concurrently with the adoption of the Act. (Stats. 1989, ch. 1095, p. 3810.)
The Act also reflects, however, many of the concepts and policies developed by
the Municipal Solid Waste Task Force (an arm of the federal Environmental
Protection Agency) as set forth in the task force's 1989 report on the national
waste management crisis. The introduction to the task force's report explains
in part: "From 1960 to 1988, [the United States] generated more waste
every year, both in total tonnage and in pounds per person, and this trend is
projected to continue. In addition, we are running out of places to put our
waste because old landfills are closing and few new landfills and combustors
are able to be sited and built. There are concerns about potential threats to
human health and the environment from combustor emissions and ash, from
landfill emissions, leachate, and litter . . . . [P] . . . This report
recommends using 'integrated waste management' systems to solve municipal solid
waste generation and management problems at the local, regional, and national
levels." (Final Rep. of the Municipal Solid Waste Task Force, United
States Environmental Protection Agency, The Solid Waste Dilemma: An Agenda for
Action (Feb. 1989) pp. 1-2.)
All further statutory references are to the Public Resources Code unless
otherwise indicated.
[**448] [***469]
Under the Act, the responsibility for solid waste management is shared by the
state and local governments (§ 40001), with solid waste handling services to be
provided by one or any combination of the following: the local
[*493] entity
itself, another local entity, or a private waste collection enterprise (§
40058). A major component of the Act, not contained in the predecessor
statutory scheme, is the substantial mandatory solid waste disposal diversion
requirements imposed by section 41780. That section provides in part that
cities and counties, through solid waste reduction, recycling, and composting
activities, "shall divert 25 percent of all solid waste from landfill . .
. by January 1, 1995" and "50 percent of all solid waste by January
1, 2000." (§ 41780, subd. (a)(1), (2).)
To meet these waste diversion requirements, the Act requires cities to develop and
implement integrated waste management plans providing for the reduction,
recycling, and reuse of solid waste, to the maximum extent feasible, in an
efficient and cost-effective manner.
2
(§ 40052, 40900, 41000.) Such local plan must include a "source reduction
and recycling element" (§ 40901, 41000), which in turn must incorporate a
"recycling" component. (§ 41003.) The recycling component must
include a recycling program and implementation schedule that demonstrate the
recycling methods, in combination with the source reduction and composting
components,
[*494]
by which the city will reduce a sufficient amount of solid waste disposed of by
the city in order to comply with the diversion requirements of section 41780.
(§ 41070.) Failure to submit a timely plan incorporating these components, or
failure to implement the plan and meet the diversion requirements and
deadlines, will subject a city to penalties of up to $10,000 per day. (§ 41813,
41850.)
FOOTNOTES
2
In its report, cited at footnote 1,
ante, the Municipal Solid Waste Task
Force observes that "[a] key element of integrated waste management is the
hierarchy, which favors source reduction (including reuse) to first decrease
the volume and toxicity and increase the useful life of
products in
order to reduce the volume and toxicity of
waste. Recycling (including
composting) is the preferred waste management option to further reduce
potential risks to human health and the environment, divert waste from
landfills and combustors, conserve energy, and slow the depletion of
nonrenewable natural resources." (The Solid Waste Dilemma: An Agenda for
Action,
supra, at p. 2, italics in the original.) This suggested
hierarchy is adopted in section 40051, providing in part that local agencies
shall "[p]romote the following waste management practices in order of
priority: [P] (1) Source reduction. [P] (2) Recycling and composting. [P] (3)
Environmentally safe transformation and environmentally safe land disposal, at
the discretion of the city or county." (§ 40051, subd. (a).)
The requirement of an integrated waste management plan corresponds to the
recommendation of the Assembly Report that California waste management "be
revised to place greater emphasis on a multi-faceted approach to solving the
State's garbage woes" through an
integrated waste management
program, in which
mandatory recycling measures may be incorporated into
the overall solid waste planning process. (Assem. Rep.,
supra, at pp.
i.,1-2, 53-60.)
II
Long before the adoption of the Act, it was well established that the
regulation and control
[**449] [***470] of waste collection and disposal constituted a
proper exercise of municipal police power reserved to state and local
governments. (See
City
of Camarillo v.
Spadys Disposal Service (1983)
144 Cal.App.3d 1027, 1030 [193 Cal.Rptr. 22]; Matula
v.
Superior Court (1956)
146 Cal.App.2d 93, 99-101 [303 P.2d 871]; Davis
v.
Santa Ana (1952)
108 Cal.App.2d 669 [239 P.2d 656]; see also Health & Saf. Code, former
§ 4250; Gov. Code, former § 66757, subd. (b).) Furthermore, for nearly a
century, California
courts explicitly have affirmed the authority of cities and counties, in the
exercise of their police power, to control waste collection and disposal by the
means deemed most effective for the public health and safety, including the
granting of exclusive waste collection and disposal privileges to one or more
private enterprises.
Thus, for example, in
In
re Zhizhuzza (1905) 147 Cal. 328 [81 P. 955], this court, upholding a
city ordinance restricting waste collection privileges by exclusive contract,
held: " 'Laws or ordinances enacted under the police power for the
protection of the public health, reasonably adapted to that end, are not
unconstitutional because they may incidentally operate to deprive individuals
of their property or its use without compensation, or interfere with their
personal liberty, nor because they may give one person a monopoly of a certain
business or occupation, private rights being required to yield in such case to
the public good.' " (
Id.,
at p. 335; see
California
Reduction Company v.
Sanitary Works (1905) 199 U.S. 306, 321 [50
L.Ed. 204, 211, 26 S.Ct. 100] [granting of exclusive waste disposal
privileges within City and
[*495]
County of San Francisco was authorized by state constitutional provision for
local determination of the "most appropriate method of protecting the
public health in the matter of disposal of garbage, refuse and other materials
found on private premises"];
Gardner
v.
Michigan (1905) 199 U.S. 325 [50 L.Ed. 212, 26 S.Ct. 106].)
The principles articulated in
In
re Zhizhuzza, supra, 147 Cal. 328, have been reiterated and affirmed
repeatedly in subsequent decisions rendered through the present decade. (See
City
of Camarillo v.
Spadys Disposal Service, supra, 144 Cal.App.3d. at
pp. 1030-1032 [decision to restrict the issuance of waste disposal permits
to no more than one company "falls within the clearly articulated and
affirmatively expressed policy of the state"];
City
of Santa Rosa v.
Industrial Waste & Debris Box Rentals, Inc.
(1985) 168 Cal.App.3d 1132, 1135 [214 Cal.Rptr. 737];
Universal
By-Products, Inc. v.
City of Modesto (1974) 43 Cal.App.3d 145, 149,
fn. 1 [117 Cal.Rptr. 525];
Matula
v.
Superior Court, supra, 146 Cal.App.2d at pp. 99-101; see also
Hybud
Equipment Corp. v.
City of Akron, Ohio (6th Cir. 1981) 654 F. 2d
1187, 1192 ["Courts in literally hundreds of reported cases have
upheld the authority of local governments to monopolize and control local
garbage collection by eliminating or restraining competition among private
collectors."].
Cities and other local entities that have opted to rely upon an exclusive
franchise for all waste handling services within their local boundaries
traditionally have explained such action on the ground that competition in the
solid waste handling industry may impede necessary regulation and encourage
cost-cutting devices that pose a threat to the public health. Such entities
apparently have concluded that the designation of an exclusive waste handling
enterprise is an efficacious method to ensure that all persons and businesses
within a community will be served at reasonable rates, regardless of their
individual circumstances, and to minimize the noise and disruption of
collection. (See
City
of Santa Rosa v.
Industrial Waste & Debris Box Rentals, Inc., supra,
168 Cal.App.3d 1132, 1134-1135.)
III
Recognizing that local entities generally are in the best position to determine
the preferable means of addressing the health and safety problems posed by the
handling and disposal of waste, the Act contemplates that local agencies may
utilize exclusive franchises with private solid waste handling enterprises to
implement the purposes and requirements of the Act. Section
40059, subdivision (a), expressly authorizes local entities to determine
all
[*496]
aspects of solid waste handling of local concern, including whether
[***471] "solid
[**450]
waste handling services" are to be provided by means of exclusive
franchise or contract. (§
40059, subd. (a).)
Definitions governing the construction of section
40059, subdivision (a), are set forth in various provisions of the Act.
"Solid waste handling" is defined as "the collection,
transportation, storage, transfer, or processing of solid wastes." (
§
40195.) "Processing" is defined as "the reduction,
separation, recovery, conversion, or
recycling of solid waste." (§
40172, italics added.) "Recycling" is defined as "the
process of collecting, sorting, cleansing, treating, and reconstituting
materials that would otherwise become solid waste, and returning them to the
economic mainstream in the form of raw material for new, reused, or
reconstituted products." (§
40180.) The phrase "segregated from other waste material" is
defined as including the "
binding of recyclable material separately
from other waste material" and the "
physical separation of
recyclable material from other waste material." (§ 40190, subds. (a),
(b), italics added.)
Thus, in light of these definitions, under section
40059, subdivision (a), a city may grant exclusively to a solid waste
handling enterprise the right of "collection, transportation, storage,
transfer, or processing of solid wastes." Because the
"processing" of solid wastes includes the "recycling of solid
wastes," which in turn includes "collecting . . . materials that
would otherwise become solid waste . . ." the Act authorizes a city to
grant by exclusive franchise to a single private recycling enterprise the right
to provide commercial recycling services within city limits, including the
collection and removal of recyclable materials specifically identified in the
franchise agreement.
The public benefits of, and municipal purposes served by, an exclusive
franchise for
recycling services are demonstrated by the exclusive
franchise agreement in the present case between the City of Rancho Mirage and Waste Management. Under
this agreement,
at no additional cost to the city, Waste Management is
required to collect and remove all recyclable materials (as specified and
defined therein) that are segregated and placed in separate recycling
containers at the curbside on public streets or adjacent to multifamily
complexes, or in bins at a location designated by commercial establishments.
Waste Management also is required to provide and distribute containers to all
residences, and bins to
all commercial establishments, and must assist
homeowners in participating in the curbside recycling program. As compensation
for providing recycling services at no additional cost to the
[*497] city and its
residents, Waste Management is authorized to retain a portion of the revenues
generated from the sale of recyclable materials.
3
FOOTNOTES
3
Waste Management is authorized to retain the revenue from the sale of
recyclable materials, except (1) in the event the curbside and multifamily
recycling programs become "self-sufficient," Waste Management shall
share with the city, on an equal basis, any revenue generated by these programs
in excess of their cost, and (2) Waste Management is required to credit to each
commercial customer a fixed percentage (depending upon the type of recyclable
material involved) of the revenue received by Waste Management from the sale of
recyclable materials collected from that customer.
The agreement further provides that Waste Management shall develop and
implement a public-awareness program to promote and inform the community of the
benefits of recycling. Finally, Waste Management is required to submit (to the
city) monthly reports of the total tonnage of recyclable materials recovered
and sold and the market prices of such materials, as well as yearly status
reports designed to facilitate an assessment of the effectiveness of all
aspects of the program.
Thus, the exclusive franchise enables and requires Waste Management to provide
a comprehensive recycling program throughout the city, offering recycling
services to all city residents and commercial establishments, and promoting
their participation in the recycling program. The exclusive franchise
facilitates the city's coordination and supervision of recycling services
within city limits, and provides the city with a helpful method of meeting its
obligations under the Act; among other reasons, Waste Management will be
motivated strongly to ensure that the city meets its waste diversion and
reporting requirements under the Act, in that failure to
[**451] [***472] do so
likely would mean a loss of franchise rights.
The exclusive nature of the rights accorded Waste Management under the
agreement provides that entity with economic incentive to render the foregoing
services and benefits, which it would not have under a nonexclusive
arrangement. As explained by Waste Management in support of its application for
preliminary injunction, the commercial customers that collect their recyclable
materials in large bins generate far greater amounts of recyclable material and
can be serviced much more efficiently. For this reason, according to Waste
Management, commercial customers "are the key to the economic viability of
the recycling program. Enough revenue must be realized from the sale of
recyclable material generated by the few large commercial customers to cover the
cost of servicing all customers for the program ultimately to succeed."
[*498] The
record indicates Palm Springs Recycling seeks to collect only the most
commercially desirable recyclable materials, such as glass and cardboard, and
to collect such materials only from large commercial establishments. Palm
Springs Recycling has demonstrated no interest in the recyclable materials
generated by residences and small commercial enterprises. As characterized by
Waste Management, Palm Springs Recycling seeks "to skim off the cream of
the recycling business," leaving "the less profitable and
unprofitable recycling business to [Waste Management] which it is contractually
bound to accept." Waste Management maintains that, absent enforcement of
its exclusive franchise rights, the comprehensive recycling program is not
economically viable.
IV
The majority concedes the Act authorizes exclusive franchises for solid waste
handling services. The majority asserts, however, that "solid waste"
as defined under section
40191, subdivision (a), of the Act does not include materials sold by the
owner for recycling, because if sold the materials have not been
"discarded" within the meaning of the statutory definition of
"solid waste." For similar reasons, the majority also maintains that
if an owner of property is able to sell that property for recycling purposes,
such disposition of the property does not fall within the category of
"solid waste handling" that may be covered by an exclusive franchise.
I agree with the majority that the exclusive solid waste collection and
recycling rights of an exclusive franchisee such as Waste Management
do not
arise until the owner of the recyclable or nonrecyclable material discards
that material for collection by a waste handling service or a commercial
recycling enterprise, thus rendering this material a part of the solid waste
stream. Thus, the concern of the majority that enforcement of an exclusive
franchise for commercial recycling services would interfere with a Boy Scout
paper drive, or some other civic or charitable operation, is unfounded. When,
however, an owner chooses to dispose of material that previously would have
been disposed of as waste, by transferring the property to a commercial
recycling enterprise, I believe it is clear that the material has been
"discarded"
within the meaning of the Act, and that the
exclusive franchisee has the exclusive right to perform those collection
services.
The majority's conclusion, excluding from the ambit of the exclusive franchise
arrangement authorized by the Act all material that a property owner chooses to
sell for recycling purposes, is not supported either by the
[*499] fundamental
purpose or the statutory language of the Act. As stated previously, the primary
objective of the Act is to encourage and require
integrated 4
solid waste management, promoting recycling as the preferred waste management
option over landfill disposal. To accomplish that goal, the Act establishes, as
one of its major components, requirements for significant reductions in the
amount of the solid waste disposed of at landfills. As stated, section 41780,
subdivision (a), provides, in part, that cities and counties "shall divert
25 percent of all solid waste from landfill" by January 1, 1995, through
"recycling . . . activities," and "shall divert 50 percent of
all solid waste" by January
[***473] 1,
2000,
[**452] through "recycling . . .
activities." The Act specifically provides in section 41781 that "(a)
. . . for the purpose of determining the base rate of solid waste from which
diversion requirements shall be calculated, 'solid waste' includes . . . [P]
(1) The amount of solid waste generated within a local agency's jurisdiction,
the types and quantities of which were disposed of at a permitted disposal
facility as of January 1, 1990." This provision makes clear that, if a
material is of a type and quantity that was disposed of at a permitted disposal
facility as of January 1, 1990, the recycling of that material would be
considered part of the solid waste stream regulated by the Act. Nothing in the
language of the statute suggests that solid waste diverted from landfill
disposal through recycling, and thus regulated by the Act, includes only
material that has
no value to the owner or has not been sold by the
owner for recycling purposes. Instead, the clear implication of the statutory
language of the Act, interpreted as a whole, is that the "solid waste
stream" includes material sold for recycling purposes where, but for the
availability of recycling, the material otherwise would have been disposed of
as landfill.
FOOTNOTES
4
See footnote 2,
ante.
Moreover, one of the primary purposes of the Act is to encourage more efficient
methods of recycling, as well as the creation of markets for recycled materials
(i.e., to make recyclable materials more commercially marketable). In light of
this objective, it would be anomalous to interpret the Act as excluding a
particular recyclable material from a city's integrated waste management
program simply because, through technology encouraged by the Act, the recycling
process for that particular material has become economically viable. Indeed, it
may well be impossible for municipalities to further the Act's objectives and
meet the Act's very substantial waste-diversion requirements if, as newer and
more efficient recycling processes are developed and additional markets are
created, municipalities cannot count, as part of the quantum of solid waste
satisfying the waste-diversion requirements, those materials that, because of
their recyclable potential, have achieved some commercial value to the owner.
Correspondingly, if recyclable material sold by its owner for recycling
purposes cannot be counted
[*500]
under section 41780 as waste diverted from disposal through recycling,
municipalities may have little incentive to encourage either new forms of
recycling, or markets for recyclable materials.
Furthermore, if the recycling of material that has commercial value, and that
may be sold by the owner, is not part of solid waste handling regulated by the
Act, exclusive franchises for specified recycling services frequently may no
longer be economically viable for the exclusive franchisee, thereby diminishing
a municipality's ability to effectuate a comprehensive citywide recycling
program such as that provided by Waste Management under the exclusive franchise
agreement at issue. Under the majority's interpretation of the Act, a
municipality would have no authority to prevent a competing commercial
recycling enterprise such as Palm Springs Recycling from "skimming off the
cream" of the recycling business, leaving many of the municipality's
residents without an economically viable recycling program.
5
FOOTNOTES
5
Although the majority does not rely upon section 41952
in support of its holding, the Court of Appeal construed that provision as
authorizing owners of recyclable materials to contract with a recycling
enterprise of their choice for the collection of these materials,
notwithstanding the existence of an exclusive franchise granted by the local
governing entity. I conclude the Court of Appeal misconstrued the scope of section 41952.
That statute appears in chapter 9 of part 2 of division 30 of the Public
Resources Code (§ 41950 et seq.), entitled "Unlawful Acts." The
provisions of chapter 9 proscribe, among other actions, the unauthorized
removal of recyclable materials from receptacles maintained for their
collection. This provision relied upon by the Court of Appeal clarifies that
chapter 9, proscribing "unlawful acts," does not
in and of itself
(1) require the owner of recyclable materials to dispose of them in curbside
receptacles, (2) subject the owner of such recyclable materials to civil
penalties for retrieval of an item previously placed in its own receptacle, or
(3) otherwise restrict the owner's ability to sell or dispose of such
materials.
By its express terms, however, section 41952
pertains solely to chapter 9. Although nothing in chapter 9 restricts the
disposal of recyclable materials by the owner, as explained above, section 40059, subdivision (a),
contained in a different part and chapter of the Act,
does authorize a
city to regulate commercial recycling services within city limits by exclusive
franchise, and thereby to restrict the manner of collection and disposal of
recyclable material by commercial entities. In view of its language, context,
and purpose, section 41952
cannot reasonably be interpreted as repealing the authority of a local entity
(to enter into exclusive franchises) explicitly conferred by section 40059, subdivision (a).
[**453] [***474]
Finally, courts long have rejected the notion that the owner of waste material
having some market value has an interest in that material superior to the
police power to protect the public health and safety. (See
California
Reduction Company v.
Sanitary Reduction Works, supra, 199 U.S. 306;
Gardner
v.
Michigan, supra, 199 U.S. 325;
In
re Pedrosian (1932) 124 Cal.App.692 [13 P.2d 389];
Ex
parte Santos (1928) 88 Cal.App. 691 [264 P. 281].) More recently, the
Sixth Circuit in
Hybud Equipment Corp. v.
City of Akron, Ohio,
supra, 654 F.2d 1182, reached a similar conclusion in the context of
recycling. In that case, the Court of Appeals upheld an ordinance
[*501] of the City
of Akron
requiring that all solid waste be delivered to the City's "waste to
energy" facility. Rejecting the claim that recyclable material had become
more valuable in modern times and that the older case law relating to the
municipal police power to regulate waste therefore no longer was applicable,
the court held: "The old cases are not anachronisms. They are not
distinguishable on any of these grounds. The solid waste disposal problem is as
serious today for cities as in the past, perhaps more serious." (
Id.,
at p. 1193.)
VI
The provisions of the Act authorizing a municipality to establish an exclusive
franchise for the recycling of material, even if the material is of the type
that has a market value because of its potential for recycling, do not permit a
municipality to require that the owner of such property dispose of it through
the exclusive franchisee without receiving just compensation for such
recyclable material. The just compensation rights of property owners, however,
is not an issue presented by this case, because no property owner is a party to
this action. Instead, the sole issue before us is whether a competing recycling
company possesses the right to operate in violation of an exclusive franchise
agreement (for recycling services) authorized by state law.
Moreover, it is important to note that
any exclusive franchise for waste
handling services will impinge to some extent upon the economic interests of
property owners. Even when dealing with waste having
no market value, an
exclusive franchise for its collection and disposal may require that some
residents pay rates for waste handling services higher than these particular
residents might have been able to negotiate with a private enterprise other
than the exclusive franchisee. As discussed previously, however, past cases
repeatedly have affirmed the authority of municipalities to enter into
exclusive franchises that limit the authority of individual residents to
dispose of their waste, because of the general societal benefits afforded by an
exclusive franchise--for example, the assurance that
all persons and
businesses within a community will be served at reasonable rates, without
regard to their individual circumstances, and the reduction of the
municipality's burden of supervising the safe delivery of these services.
VII
For the foregoing reasons, I believe that the city's grant of an exclusive
franchise to Waste Management for solid waste handling services within city
limits, including the recycling services described in the exclusive franchise
agreement, was authorized by the Act. Therefore, I would reverse the
[*502] judgment of
the Court of Appeal and remand the case to that court with directions to affirm
the judgment entered by the trial court.
Mosk, J., concurred.
