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HomeMy WebLinkAboutMINUTES - 04251989 - 2.7 COUNTY COUNSEL'S OFF/CE CONTRA COSTA COUNTY _ MARTINEZ, CAUFORNIA Date: April 24, 1989 To: Board of Supervisors From: Victor J. Westman, County Counsel By: Lillian T. Fujii, Deputy County Counsel Re: County regulation of disposal fee rates at landfills in the unincorporated areas SUMMARY: While the County has no direct statutory authority (other than by franchising) to regulate disposal fee rates at privately owned and operated landfills in unincorporated areas, regulation of such rates appears possible in appropriate circumstances under the police power. Under the police power, rate regulation is possible if it reasonably relates to the accomplishment of a legitimate government purpose. (B.irkenfeld v. City of Berkeley [1976] 17 Cal. 3d 129, 158 . ). However, rate regulation must not be confiscatory and must allow a reasonable profit. Recently, user rates at landfills in the County have been substantially increased. (See attached 4-7-89 Contra Costa Times article on West Contra Costa Sanitary [North Richmond] Landfill. ) At this time, it is not clear what the factual basis is for the higher rates. This current lack of information may make it difficult for the County to prevail if a County attempt to regulate landfill rates is challenged and the County-fixed rates are not reasonable. If increased landfill rates are due to a legitimate need to accumulate funds to pay to close a landfill in an environmentally and legally acceptable fashion, disallowing the cost pass-through may be confiscatory. SUGGESTED PROCEDURE FOR THE COUNTY TO CONSIDER RATS REGULATION. 1. Gather Information. We suggest that the Board first take steps to obtain as much information as possible on the need or lack thereof for rate regulation. This should be done so that if the Board determines rate regulation is necessary, its position will have a factual basis . Specifically: Board of Supervisors -2- April 24, 1989 a. First, obtain background reports from staff and contractors (e.g. , Touche Ross & Co. ) as to need or lack thereof for rate regulation. These reports should cover basic landfill information such as identification of the landfills (.those in the unincorporated area) that might be regulated, current and past rates, and to the extent such. information is accessible, operating costs and profits of the landfills. This type of information is needed so- that the Board will be in an adequately informed position to determine whether current landfill operators (or one or two of them) may be charging unreasonably high rates - rates that are not competitive due to the current landfill shortage. Reports should also address real or alleged adverse results . of the higher rates, if any. For example, is there any evidence that the higher rates are causing an increase in illegal dumping? b. When the Board is satisfied it has sufficient background .—on the subject, hold public hearings. --The-public- hearings -should allow all interested parties to testify and submit written evidence on whether rate regulation is now needed or justified, including comments on the reports before the Board. 2. Fin_ dings. While not legally necessary, should the Board determine that it has sufficient justification to regulate rates, we suggest that findings be developed to focus the supporting evidence presented to the Board. These findings can be included in the rate regulation ordinance. 3 . Develop Rate Regulation Formula. If the Board determines there is a need for rate regulation and is familiar with the types of problems which must be addressed in regulating landfill disposal fee rates, the County must develop a formula for setting the rates . To defuse any "unfair treatment" or discrimination claims, any such formula should be flexible enough to allow for differences at different landfills, but uniform enough that all landfills are otherwise treated equally. Since the County staff's experience with landfill rate regulation is limited, the Board may_wish to solicit comments from other parties more familiar with the mechanics of landfill rate regulation. Hiring qualified consultants may be helpful. Board of Supervisors -3- April 24, 1989 LEGAL DISCUSSION: Background. Acme Fill recently increased its disposal fee from approximately $25. 00 per ton to approximately $47. 00 per ton. This increase, as well as the increased rate charged at the West Contra Costa Sanitary Landfill, has been criticized, and the Board has been urged to consider whether regulating landfill disposal fees is now necessary. While there is no express statutory authority (other than by franchising) - for the County to regulate rates at privately owned and operated landfills, regulation is possible under the police power in appropriate circumstances. (Cal. Const. , art. XI, 57 . ) Several city and other officials have expressed the view that the County is within its rights to regulate rates . However, that right - does not necessarily mean the County can legally lower the existing rates charged at the landfills in the unincorporated area without a factual basis to support that action. The following is an analysis of Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, the Berkeley rent control case which is the landmark case on local government regulation of prices under its police power. We discuss some of the difficulties the County can encounter if it determines to regulate, and particularly to lower, the rates charged at the private landfills in the unincorporated area. Birkenfeld requires existence of "constitutional facts. " The unanimous Supreme Court decision in Birkenfeld radically departed from many traditional views on a city or county's ability to legislate pursuant to its police power in California. The police power enables cities and counties to make and enforce within their limits all local, police, sanitary and other ordinances and regulations not in conflict with general laws. (Cal. Const. , art. XI, V . ) Birkenfeld clarified that a city or county's police power, while extending only to its territorial boundaries, and being subject to preemption by general law, is otherwise as broad as the State's . (Id. at page 140 . ) Legislation regulating prices or otherwise restricting contractual or property rights is within the police power if such legislation is reasonably related to the accomplishment of a legitimate governmental purpose. (Id. , at page 158 . ) The existence of a traditional type emergency is not a prerequisite to such legislation. (Id. , at page 158. ) Nonetheless, there .are limitations upon government's ability to regulate prices . In Birkenfeld, the purpose of the rent control Board of Supervisors -4- April 24, 1989 ordinance was to alleviate the ill effects of the exploitation of a housing shortage by the charging of exorbitant rents to the detriment . of the public health and welfare of the city, particularly its underprivileged groups. (Id. , at page 160. ) Thus, "the constitutionality of residential rent controls under the police power depend[ed] upon the actual existence of a housing shortage and its concomitant ill effects of sufficient seriousness to make rent control a rational curative measure. " (Id. , at page 160. ) While the existence of "constitutional facts" upon which the validity of an enactment depends is presumed in the absence of any showing to the contrary, their nonexistence can properly be established by proof. (Id. , at page 160. ) Contra Costa landfill situation - need to gather supporting information Under Birkenfeld, regulation of rates at landfills located in the unincorporated area of the County may be permissible if a shortage of landfill space is exploited by the charging of exorbitant rates, with resulting negative effects upon the health, safety or well-being of the public. (Id. , at page 160. ) - While--the -Board's -declaration as to policy and existence of facts to further that policy is presumed absent a challenge, if a County ordinance on disposal fee rate regulation is challenged, the County should be prepared to support its factual claims in court. (Id. , at page 160 . ) Under Birkenfeld, a rate regulation enactment should be sustained by a court unless there is "a complete absence of even. a debatable rational basis for the legislative determination" that rate control is "a reasonable means of counteracting harms and dangers to the public health and welfare" emanating from a disposal space shortage. ( Id. , at page 161 . ) Based on our familiarity with the existing situation, it is this office's opinion that it would be best to develop a better-known fact base before .rate regulation is undertaken. We recommend at least a staff and Board investigation and public hearings to determine if there really is a need to regulate prices. While rates have increased, we do not appear now to have enough facts and information to conclude that any increased rates are exploitive or exorbitant. We recommend that the Board should be in an adequately informed position before determining whether rate regulation is now necessary. Birkenfeld prevents imposition of rates that are confiscatory. While Birkenfeld recognized the legality of price control regulations under the police power when such regulations are reasonably calculated to eliminate excessive rates (Id. , at page 165) , the rates established must allow for a just and reasonable Board of Supervisors -5- April 24, 1989 return on property. (Id. , at page 165. ) Further, " [p]rice control, like any other regulation, is unconstitutional . . . if arbitrary, discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty. " (Id. , at page 165. ) In other words, landfill operators must be allowed to make a reasonable profit. Birkenfeld did not provide guidance as to what expenditures are properly considered in determining whether a government-established rate will allow a sufficient profit to avoid being labeled as unconstitutionally confiscatory. However, to the extent that closure costs will be incurred because of relatively recently imposed environmental regulations, it appears to this office that such expenditures are valid expenses which must be allowed in determining whether a landfill operation is making a profit. The Acme Transfer Station poses a different and more difficult problem, since money apparently will be collected at one facility to fund closure of another. We anticipate the Board-initiated Touche Ross & Co. study will develop a factual basis to assist the Board in . determining whether and to what extent rate regulation at the .transfer station is justified.. Again, however, if a transfer station is an ongoing concern, and the cost to close a landfill must be collected at a transfer station, it may be difficult to disallow those costs at the transfer station. Birkenfeld rent rollback disallowed because of unreasonable delays in adjustments. Board members have discussed freezing further increases in disposal fee rates at Acme Fill until the Acme rate study initiated by the Board can be complete. The Birkenfeld ordinance involved a rent rollback, followed by a unit-by-unit adjustment of rents by a rent control board. (Id. , at pages 165-167 . ) The court avoided ruling on the rollback provision by itself ( Id. , at page 167 ) , and invalidated the rent rollback provision because such provision, when coupled with the lengthy delays faced by landlords before being allowed to adjust the rents, was "not reasonably related to the amendment's stated purpose of preventing excessive rents and so would deprive the plaintiff landlords of due process of law if permitted to take effect. " (Id. , at page 173 . ) A rate freeze at the landfills may not be as drastic as a rollback, especially in the case of Acme Fill, since Acme only recently increased its disposal fee. Assuming the "constitutional facts" to support it exist, a freeze imposing reasonable rates Board of Supervisors -6- April 24, 1989 pending the results of a study is probably defensible; however, if studies take too long, the freeze will become less defensible if coupled with a subsequent real need to increase rates . LTF:df Attachment '001 WOW VVOJ Pte_.._ —O- trailer on Mount Diablo continues his fight to .. Opinions ' 14A live in the stateark on the mountain M • P 6A Marcy;,, , . 15A �..,..,• Y TR "sh forced -. to seekh"ome, ', says. hauler i By Denis Cuff t' „ - Stall venter • ` »... MARTINEZ -- The trash collector for Orinda and f, ' Moraga says he won't be allowed to dump in the Rich- mond landfill after Monday because he won't pay a sur- charge on Central County trash. �" ,•� ry As a result,no one knows.where Orinda and Moraga trash will go beginning Tuesday, George Navone, vice -'•� s president of the Orinda-Moraga Disposal Co.. said Thursday. .wk!,- '" , "qr He said he might tryto use Martinez or Antioch dumps if an arrangement can be worked out in time. Navone says the Richmond dump owners, prodded by the city of Richmond,are demanding a $14 per ton • surcharge on all trash_ from outside West Contra Costa County. Ken Little, Oririda-Moraga Disposal Co.'s attorney, said the firm doesn't want to pay the fee because it tt-ars it won't be allowed to pass the cost onto homes and businesses. The surcharge would add more than$1 a month to basic household rates in Orinda and Mor- aga, he estimated. The company began shipping its trash to Richmond last fall because the Acme Fill dump in Martinez is run- Z ning out of space and is expected to close soon. "We won't know what we're supposed to do;' Little C ,aid. "We're caught between one public agency that wants the fees and another agency that says the fees . aren't justified." x Richmond officials contend the surcharge is needed i r compensate West County for dump space lost-be- suw of trash accepted from outside the area, leading an earlier closure of the landfill and higher West +unty garbage fees. �d But the Central Contra Costa Sanitary District board. ,,-4ulaior of Orinda and Moraga trash rates. contends ;:+t• import fee is illegal and excessive. We don't think the city of Richmond has the right + ht,ld the collector hostage by demanding exorbitant for non-West County trash." said Paul Morsen, t -•otral San's deputy general ntartW. 114sen said the Centra! 3&0 bgsrd'hlted 011torney, Art Shanis,a former ILAJ ,moi 0 t,httt,ns against the surchatp.• The Central San Boatt pids board meeting Thursdq.bad no, )ond otters a respite from the heat for Walnut Creek resident Terri vune,should do. " -44fih, Richmond City Couneihvom says the surcharge is both taitr and deserves compensation for outside: old u m m e r t 1 m e the Richmond dump tsoonar smwid ur tuttaats;6vi