Local jurisdictions cannot force businesses and consumers to hand over their recyclables to private companies that hold government-awarded exclusive franchises in the area, according to a ruling by the California Supreme Court.

The ruling, which was handed down on March 31, affirms an appeals court decision upholding the right of Palm Springs Recycling Center (PSRC) to collect recyclables from businesses in the city of Rancho Mirage, Calif.

The case began with a contract between the city and a unit of Waste Management, giving the company the exclusive right to collect, transport, process and dispose of residential and commercial refuse. Under the contract, Waste Management also secured the exclusive right to collect source-separated recyclable materials from residences and commercial establishments and to keep the revenue from the sale of such materials.

At the same time, the city adopted an ordinance forbidding anyone other than the city or its contractor from collecting, hauling or disposing of refuse accumulated in the city.

Under its exclusive franchise, Waste Management established a city-wide recycling program for single-family residences, multi-family complexes and commercial establishments.

After the contract went into effect, PSRC began collecting recyclable materials from commercial establishments. The city and Waste Management responded by taking PSRC to court. PSRC was charged with violating the rights of the city and its contractor under the agreement and the ordinance and with ignoring the city's demands to stop collecting recyclable materials.

For its part, PSRC countersued the plaintiffs, alleging various illegal and unconstitutional actions by the city and Waste Management. Each side sought an injunction to prevent interference with its operations.

The trial court sided with the city and enjoined PSRC from collecting recyclable materials. However, an intermediate appeals court reversed the judgment, ruling that state law did not authorize the city to grant any exclusive franchises for the collection and removal of recyclables that are not "discarded" by their owner. Until the generator discards the recyclable materials into city-specified bins, the appellate court concluded, the owner retains control and may arrange to have the items collected by any recycling enterprise.

By a vote of five to two, the state supreme court noted that, under the California solid waste law, local governments may award an exclusive franchise for "solid waste handling" services. However, the court continued that items with an economic value to their owner don't fit the statutory definition of "solid waste."

"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."

Thus, under the court's reasoning, if a generator tosses his recyclables into a bin furnished by an exclusive franchisee and gets nothing in return, he has discarded his property and it is waste. However, if the generator dumps the items into the bins of the franchisee's competitor who pays him for the material, the owner has thus sold the property and not discarded it.

One who owns discarded recyclable materials and desires to sell or donate the items cannot be compelled by local government to hand over the property to an exclusive franchisee, under the high court's ruling. Still, the owner cannot simply discard the items as he sees fit. An exclusive franchisee would have the right to collect the discarded items (waste) under its contract.

The state supreme court ordered the case back to the trial court with directions to issue a permanent injunction in favor of PSRC, prohibiting the city from interfering with the company's collecting, transporting, processing and disposing recyclable materials acquired from commercial establishments for compensation.

Californians Against Waste (CAW), a Sacramento-based environmental lobbying group, hailed the decision. "Independent recyclers encourage competition and efficiency which are necessary to make recycling work," said CAW Policy Associate Rick Best. The case has been the focal point for an ongoing debate in California over flow control of recyclable materials. "Flow control is one of the hottest issues in recycling," said Best.

Surprisingly, not all local governments are unhappy with the ruling. Joan Edwards, solid waste director for the city of Los Angeles, praised the decision as a "first step in ensuring that cost-effective recycling continues in the Los Angeles area." Clearly identified and separated recyclables "should be exempted from exclusive franchises for solid waste," she said.

As a practical matter, a comprehensive recycling pro