MUNICIPAL CORPORATIONS - GARBAGE - EXCLUSIVE LICENSE - AUTHORITY TO ISSUE AND PRESCRIBE THE RATES AND LICENSE FEE

MUNICIPAL CORPORATIONS - GARBAGE - EXCLUSIVE LICENSE - AUTHORITY TO ISSUE AND PRESCRIBE THE RATES AND LICENSE FEE.

(1) Second, third and fourth class municipalities may issue a license granting the exclusive right to collect and dispose of garbage within the municipality.  (2) Such a license may be issued for a term exceeding one year but may not be made binding upon the city for a period beyond the term of the board which grants the license.  (3) The municipality may prescribe the service rates to be charged.  (4) A reasonable annual license fee may be set at either a fixed sum or a percentage of the gross receipts of the licensee.

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                                                                  March 14, 1960

Honorable Donald H. Webster
Director, Bureau of Governmental
Research and Services
266 J. Allen Smith Hall
University of Washington
Seattle 5, Washington                                                                                    Cite as:  AGO 59-60 No. 106

Dear Sir:

            This letter is in reply to your questions which we paraphrase as follows:

            (1) May second, third and fourth class municipalities issue a license which grants to the recipient the exclusive right to collect and dispose of garbage within the municipality, the service to be rendered to those recipients who voluntarily contract with the licensee?

            (2) May such a license be issued for a period exceeding a year?

            (3) May the service rates be prescribed by the municipality?

            (4) May the annual license fee be either $3,500, or a percentage of the gross receipts of the licensee?

             [[Orig. Op. Page 2]]

            We answer your first, third and fourth questions in the affirmative and the second question in the affirmative as qualified in the analysis.

                                                                     ANALYSIS

            InWallis v. Fidelity & Deposit Company of Maryland, 155 Wash. 618, 285 Pac 656 (1930) the court stated on page 620:

            "That a city in this state has the right, under the police power, to handle garbage itself or to provide for its being handled by private parties, is well settled.  (Citations)."

            RCW 35.21.120, which is the codification of chapter 270, Laws of 1943, provides:

            "Every city and town may by ordinance provide for the establishment of a system of garbage collection and disposal for the entire city or town or for portions thereof, and award contracts for garbage collection and disposal or provide for it under the direction of officials and employees of the city or town."

            Every city or town, therefore, has the power to collect and dispose of garbage, or to contract with another to do so.  It does not appear, however, that a city or town is under an absolute duty to use either of those methods.  RCW 35.21.120 by the use of the word "may" indicates that the statute is merely permissive.  InWallis v. Fidelity & Deposit Company of Maryland, supra, the court referred to the city's power as a right rather than a duty.  Police power is usually thought of as a power which is exercisable for the protection of the public health, welfare, and morals, and to promote the public welfare.  If such a need did not exist, in that the disposal of garbage could adequately be handled by a privately owned firm, it does not appear that a city or town would be required to dispose of the garbage itself or to enter into a contract to have it done.

            McQuillin, 7 Municipal Corporations § 24.242 provides:

            "A municipality may perform the function of removal of waste products directly through its own employees; it may have them performed under a public contract; or it may require a license or permit to collect, transport or dispose of such substances. . . ."

             [[Orig. Op. Page 3]]

            With regard to granting such licenses and making them exclusive, McQuillin, 9 Municipal Corporations § 26.135, sets out that:

            ". . . In the interest of the public health, safety and convenience it is competent for a municipal corporation, as a reasonable and necessary exercise of the police power, to require a license or permit to collect and remove dead animals not slain for food, garbage, offal, etc., house dirt, rubbish, ashes, contents of sinks, cesspools, privy vaults, to transport these waste substances on city streets, or to engage in scavenger work generally within the corporate area.  Licenses or permits of this character may be limited in number or made exclusive in order to promote efficiency in the removal of these waste products and in order to make police regulation more concentrated and effective.  No unlawful restraint of trade ensues as a consequence of thus limiting persons engaged in this activity, since it is primarily governmental in nature and object, although private enterprise is utilized in performing it. . . ."

            The Supreme Court of Washington expressed a similar view in the case ofCornelius v. Seattle, 123 Wash. 550, 558; 213 Pac. 17 (1923) in which it considered a contract which granted the exclusive right to collect garbage and the ordinance under which it was made.  The ordinance provided that such a contract could be let to a citizen of the United States.  In holding that such a contract was not in violation of the fourteenth amendment to the Constitution of the United States, the court stated:

            "It is also true that common occupations and businesses of the community are protected under these provisions of the constitution from prohibition by the legislative power.  But, as we have seen, the right of a city to prohibit scavenging and garbage collecting has been repeatedly sustained as not falling within the rule of common occupations and businesses.  The service performed is a public service and the contractor becomes in effect a public employee. . . ."

            As to duration, the very basis for issuing a license is, as we have pointed out, an exercise of the police power.  While we have found no requirement that a license must be issued on an annual basis, as an exercise of governmental power, it cannot be granted for a term longer than the term of the  [[Orig. Op. Page 4]] council which grants it.  See 37 Am. Jur., Municipal Corporations, § 66.

            Regarding rates, our conclusion is based upon a general rule stated in McQuillin, 9 Municipal Corporations § 26.135, as follows:

            "Reasonable qualifications of licensees, conditions and requirements may be made to govern the grant or holding of such licenses. . . ."

            The establishment of the rate which a garbage collector may charge a customer for the service seems to be well within what would be considered a reasonable requirement, especially if the license to collect and dispose of garbage is an exclusive one.

            Finally, by RCW 35.23.440 (9), RCW 35.24.290 (7), and RCW 35.27.370 (9), second, third and fourth class cities, respectively, are permitted to impose license fees upon all occupations and trades for the purposes of revenue and regulation.

            McQuillin, 9 Municipal Corporations, relative to license fees and taxes states that:

            "The general rule is that a license fee or tax or a charge for a permit must be reasonable in amount, and an excessive exaction is void. . . ." (§ 26.32)

            "The reasonableness of a license fee or tax is presumed, especially in the absence of evidence to the contrary. . . ." (§ 26.34)

            "Generally speaking, license taxes or fees may be based on the amount of business done or sales made."  (§ 26.37)

            We conclude that a city of the second, third, or fourth class need not provide a system of garbage collection of its own, but may permit the function to be performed privately; that in that case, under its police power, a city may license the person or persons performing that function and may provide by ordinance for the granting of only one such license, and may also regulate the rates charged by the collector; that the city may provide for the exactment of a reasonable license fee either on a flat rate or on the basis of a percentage of the income from the business; and that such a license may be issued for a term exceeding a year but [[Orig. Op. Page 5]] may not be made binding upon the city for any period beyond the term of the board which grants the license.

            We trust the foregoing may be of some assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

GILBERT C. VALLEY
Assistant Attorney General