Waste franchise system widespread throughout Oregon
But who empties them, how much do they charge and how are they regulated? That’s the less obvious and more complicated side.
In some parts of the country, local units of government handle trash collection. But in most cities and counties in Oregon, including Yamhill County, franchises are awarded to private haulers.
At a meeting last week, the county’s Solid Waste Advisory Committee delayed action on a recommendation to extend Waste Management Inc.’s franchise to collect trash in the unincorporated parts of the east county after the Stop the Dump coalition took issue. By thwarting competition, the current franchise system might not be in the best interest of the county, coalition members suggested.
Recology holds the franchise in the western part of the county, Waste Management in the east. Recology won its franchise by buying Western Oregon Waste, Waste Management by buying out Newberg Garbage.
The franchise system gives these companies the exclusive right to collect and haul trash in their respective territories. They have traditionally signed like agreements with the cities in their respective territories, creating a seamless system.
The county solid waste ordinance specified how much haulers can charge customers. It requires them to turn over a certain percentage of gross receipts to the county for the privilege of exclusivity.
Yamhill County currently charges 2 percent, which last year netted it about $50,000 from Waste Management.
Fees in other local units of government range from 2 to 6 percent. McMinnville and Newberg are each charging 3 percent.
Dave Huber, district manager for Waste Management in Newberg, said residents of unincorporated areas benefit from the transfer station the company operates in Newberg as part of its city operation.
“It works well with the surrounding area,” he said. “County residents benefit from the economy of scale of having more residents nearby. If it was separate, hauling would cost more.”
But Brian Doyle, who serves on the Stop the Dump Coalition board, thinks county residents could get a better deal by opening up the franchises to competition, especially among commercial customers.
“It’s anti-competitive,” Doyle said. “There’s a clear case to be made for franchises, but it doesn’t have to be a system where all waste is franchised to one single hauler.”
He brought up New York City as an example, saying commercial waste collection is open to competition, with multiple companies competing. Portland has a similar system, with residential trash split into franchise territories, but the commercial portion of the business is open to competition.
The county’s solid waste ordinance allows its 10-year franchises to be renewed every 2.5 years without allowing another company to compete. Unless a hauler fails to provide service or does not follow the rules laid out in the ordinance, the agreement cannot be terminated.
Kristan Mitchell, executive director of the Oregon Refuse and Recycling Association, a trade group of which Waste Management and Recology are members, says the franchise model is typical for most communities in Oregon and does not usually draw any complaints.
“It is a very regulated system that has worked extremely well in Oregon,” Mitchell said. “The vast majority of cities and counties in Oregon have franchises.”
Mitchell says franchising ensures all customers receive trash pickup, even ones in rural areas that may be less profitable.
State law protects the franchise system in Oregon, exempting it from anti-trust rules, but also requiring since the early 1990s all cities with more than 4,000 residents to have recycling as part of their franchise agreements.
Solid waste ordinances and franchises also give cities and counties broad ability to regulate their solid waste system as they want. For example the City of Portland has made rules requiring recycling and composting to be collected once a week, with trash collected only every other week. Salem also has a program which allows food scraps and other putrescent waste to be placed with yard debris in a bin for collection.
But those extra programs could cost extra money, with municipalities sensitive to how much customers are willing to pay.
“Every community out there has the opportunity to run the kind of program they want to run,” Mitchell said. “You can do anything if you want to pay for it.”
At a minimum, Doyle would like to see the county’s franchise agreement shortened from 10 years to seven. He thinks 10 years is too long.
“If someone has a construction or commercial waste hauling job, he can’t look at any alternatives,” Doyle said. “He has to use the hauler who is franchised there.”
If competition was allowed for commercial customers, it could lower costs for businesses, he said.
Mitchell said open competition for commercial waste in Portland has received mixed reviews. He said rates in Yamhill County are comparable to those charged most places around the state.
Dean Kampfer, municipal relations manager for Waste Management, said the current system works well. He said it eliminates duplication of service and wear on roads from having trucks from multiple companies using them to collect trash.
“We aren’t hearing customers complaining about services and rates,” Kampfer said. “I think customers are happy with the system. I think it works well here.”
In the past, Kampfer acknowledged, the company had received complaints about not providing recycling to rural customers. But it has been offering that service now since the fall of 2011.
If Waste Management lost its franchise, Kampfer said, that could mean higher rates or a lower level of service for 2,000 customers in the eastern part of the county. He said the companies operations allowed it to save money and miles on the road by combining city and county routes together.
The Solid Waste Advisory Committee plans on holding a work session in September to consider the franchise and the solid waste ordinance. But Kampfer sees the two as separate issues.
“If SWAC wants to look at the solid waste system, it’s a different discussion,” Kampfer said. “It should vote on the franchise on what it says today.”
SWAC still has not set a date for the work session. As an advisory committee, its decisions are recommendations to the board of commissioners, who have final decision.