High Court Rejects Ban on Sale of Recyclable Trash

In its first review of a major new environmental law, the California Supreme Court held Thursday that cities cannot prevent households or companies from selling their recyclable trash directly to private companies.

The 5-2 ruling limits the ability of cities to entice garbage companies into the recycling business by promising them exclusive rights to the most valuable of recyclable materials.

The issue is important because the state has ordered cities to reduce their trash by 25% by 1995 and 50% by 2000. Cities have argued that they need maximum flexibility to meet the deadlines and avoid hefty fines. Independent recyclers counter that cities are just trying to cash in on their business.

The Legislature imposed the mandatory goals in 1989 because dumps are quickly filling to capacity. Finding sites for more dumps is politically difficult because of community opposition: Landfills can leak and contaminate underground water supplies.

In the case before the court, the city of Rancho Mirage gave Waste Management of the Desert exclusive rights to collect recyclable goods. Dozens of cities have similar arrangements.

Waste Management collected bottles, newspapers, cans and other recyclables for free from households, recouping its losses by charging large commercial waste generators, such as hotels, a fee for the pickup and then selling the materials to processors.

Waste Management shared some of its earnings from the recycling operation with the city and credited the businesses a fixed percentage of the profit.

But several large businesses opted instead to sell their wastes to Palm Springs Recycling Center, an independent recycler. The city and the garbage company sued, arguing that the recycler was violating the exclusive agreement.

A trial court ruled in favor of the city, but a Court of Appeal reversed the ruling. The appellate court held that the state law does not authorize cities to grant an exclusive franchise for recyclable materials that have not been placed into separate containers maintained by the city or its contractor.

The Supreme Court majority, in an opinion written by Justice Marvin R. Baxter, held that such exclusive franchises can be enforced only if the recyclables are actually discarded.

If someone sells recyclables, they “are not discarded and do not become waste,” Baxter wrote.

Allowing for exclusive collection could interfere with the ability of the Boy Scouts and other charities to raise money through paper drives, the court majority reasoned.

The state’s high court directed the trial court to order the city to allow Palm Springs Recycling to buy recyclables from commercial establishments.

The decision was mixed for both sides in the garbage wars. Independent recyclers wanted a clear ruling that would have allowed people to do what they want with their garbage. The cities wanted absolute control.

Under the court ruling, independent recyclers can take the trash without violating exclusive agreements only if they pay for it, lawyers for some of the litigants said. Some independents pay for trash.

“The problem is enforcement because it then forces the city to inquire into the arrangements between the generator and the collector, and whether they are actually being paid for it,” said Jon Shoenberger, an attorney for Waste Management and Rancho Mirage. “That may make things difficult for everyone.”

But Robert Bernheimer, a lobbyist for the Institute of Scrap Recycling Industries, said the decision is more favorable for the recycling industry. He said he does not believe recyclers will have to pay for the waste as long as the generator has not clearly discarded it.

“Most of the recyclers I talked to are ecstatic about this,” said Bernheimer, who represents 120 companies in California.

Justice Ronald M. George, in a dissent joined by Justice Stanley Mosk, complained that the ruling will make it harder for cities to meet their waste reduction targets.

“I believe the majority’s interpretation of the relevant legislation is clearly incorrect and will frustrate, rather than further, the important purposes” of the state law, George wrote.

Harvey Levine, who filed a friend of the court brief on behalf of nearly 60 cities, also said the decision could weaken city efforts to comply with the new disposal law.

“What you have done is plucked a profitable element of recycling out of city control,” Levine said.

Neither officials for Waste Management nor Rancho Mirage would comment on the decision because they had not read it.