A Municipality Lawfully Exercises its police powers when it grants exclusive collection rights to a limited number of private haulers, thus banishing competitors from the market, says the Supreme Court of Washington State.

Under Washington law, a solid waste collection company may operate with either a state-issued certificate of public convenience and necessity for a specific area or a municipal contract for collection.

The Seattle Municipal Code provides that no private haulers, except for the city's solid waste contractors, may transport locally generated waste through the streets. In 2001, after competitive bidding, the city signed contracts with Rabanco and Waste Management (WM), splitting the city into two zones and making each company the sole provider of commercial waste collection services within its territory. As part of the arrangement, the city has the right to designate the transfer stations or other facilities to which the waste must be delivered.

A year later, the city, by ordinance, added construction, demolition and land clearing (CDL) materials to its definition of waste. The city's contracts with Rabanco and WM gave the firms exclusive rights to collect CDL materials, but required them to compete with each other for customers on a citywide basis.

Since 1994, Josef Ventenbergs has operated a CDL collection company. He has a business license from the city, but never obtained a state certificate. His customers include construction firms who feel they are better served by Ventenbergs than by Rabanco and WM.

After Ventenbergs received a letter from Seattle stating that only Rabanco and WM could collect CDL waste, he filed suit against the city alleging that his losing access to the CDL market undermines a “fundamental right of citizenship” under the state constitution. The trial judge ruled in favor of Seattle, finding that solid waste hauling is not a constitutionally protected activity but one that falls within the police powers of a city, which may exercise this power by contracting with whomever it chooses. An intermediate level appeals court affirmed the decision.

By a 6-3 vote, the state supreme court also affirmed. “Solid waste handling is a government function,” the majority said. Although the state constitution forbids granting to some individuals and companies privileges and immunities not available to all citizens, “the … employment that Ventenbergs seeks is not private — it is in a realm belonging to the [s]tate and delegated to local governments,” the court added. “[N]o fundamental right of citizenship [allows Ventenbergs] to provide this government service.”

In addition, the state high court found that the city acted reasonably in deciding to contract only with Rabanco and WM. For one thing, by dealing with the companies, the city “had a ‘much higher degree of confidence’ that the waste would end up in appropriate places,” the opinion noted. For another, by limiting the number of contractors, the city could “establish uniform [service] standards, while promoting competition,” the court added. Last but not least, the court all but called Ventenbergs a bootlegger, stating that the “[c]ity's decision not to contract with illegally operating businesses is not unreasonable.”

[Ventenbergs v. City of Seattle, No. 76954-1 (Wash. Feb. 21, 2008)]

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: [email protected].

The columnist is a Rockville, Md., attorney and serves as general counsel of the Solid Waste Association of North America.