A License to Recycle

Federal law negates local government authority over firms that collect recyclables from commercial and industrial generators, says a federal district court ruling. [A.G.G. Enterprises Inc. v. Washington County, Oregon, et al., No. CV99-1097-KI, D.Ore., April 6, 2000]

When Congress deregulated the trucking industry in 1994, the legislation included a proviso barring "a State [or] political subdivision of a State ... [from] enact[ing] or enforc[ing] a law ... related to a price, route or service of any motor carrier ... with respect to the transportation of property." 49 U.S.C. Section 14501(c). Unfortunately, lawmakers didn't include a definition of "property."

A.G.G. Enterprises (AGG) hauls mixed waste and source-separated recyclable materials from businesses and construction sites to a recovery facility that sorts and sells recyclables. The garbage is sent to local transfer stations for eventual disposal at landfills.

When AGG decided to expand into Washington County, Ore., and the city of Beaverton, Ore., ordinances in both jurisdictions made it unlawful to collect, transport or dispose of recyclables without an appropriate license or certificate. But local practices made it difficult for AGG to do business.

An applicant for a county certificate must show that a proposed service area is not already allocated or is not being adequately served. Tellingly, the county has not awarded a new franchise since 1969. For its part, the city grants nonexclusive licenses for each of its service areas, but has never awarded more than one per district and has not issued a new license in more than 20 years. In fact, the city declined to act on AGG's license application. Incidentally, neither the county nor the city has a mechanism for awarding new franchises through open bidding or otherwise.

Within their respective territories, locally licensed or franchised haulers must serve all generators, including marginally profitable residential accounts. Collection charges are regulated to provide a reasonable profit for all-inclusive service. As these haulers see it, the bottom-line will suffer if AGG and other interlopers can cherry-pick the lucrative commercial jobs.

After hearing the evidence, U.S. District Judge Garr M. King ruled, first, that AGG is a "motor carrier" because its primary business is transporting loads for its customers via motor vehicle for compensation and, second, that the recyclables it carries are "property" under federal law.

Judge King rejected arguments by the defendants that the mixed waste loads are not property because they have negative value to the generator.

"I see no reason to restrict the determination of economic value to the generators' view rather than to the manufacturing stream as a whole," he said, citing an Interstate Commerce Commission decision in 1971 that waste materials purchased for use in recycling programs are "property."

Significantly, he found that AGG's hauling operations are part of the process "to prepare the commodity for reentry into the manufacturing stream."

The government defendants have appealed the decision.