City trash collection deregulated

Currently two garbage collection companies operate in the city of Chico. This is by design, due to concerns for public safety and road maintenance. Garbage trucks are hard on street surfaces, and minimizing the number of such trucks making trash pickups keeps road resurfacing costs down.

That’s the theory, anyway.

This week, the City Council, led by Councilmember Rick Keene, voted to “deregulate” garbage collection service by opening up the number of permits available for new haulers. Currently, the city limits the number of permits to two and must approve any rate increases.

Keene said he doesn’t think government has any right telling a private business how much it can charge its customers and says it’s time to return the service to the ranks of free enterprise, where competition among companies will keep prices down.

“This sprang out of telling business owners how to structure their rates,” Keene said. “I don’t think it’s the government’s right to do this. The alternative is to let the market set the rate.”

The matter is complicated by the fact that the city, under state law, must continue to divert recyclables and vegetative waste away from the county landfill. Under 1989’s AB939, local communities must divert 50 percent of their waste from landfills or else face $10,000-per-day fines.

The city has still not reached that diversion rate, but as long as it keeps making strides to do so, or at least appears to be making strides to do so, the state Waste Management Board will not impose the fine.

Because of the diversion law, the city must heavily regulate the haulers’ operating permits by requiring a whole host of regulations to meet demands. For that reason, the only thing the City Council deregulated with its 4-3 vote this week was its ability to control hauling rates.

The general managers for Chico’s two existing haulers, Waste Management and NorCal, the nation’s first- and sixth-largest haulers, respectively, argued in vain against the council’s action. Chico’s haulers currently charge $13.12 to pick up a 30-gallon container. That rate compares favorably with rates in other California cities where trash collection is either regulated or operated by the city.

Bill Mannel of Waste Management said “all hell will break loose” when other haulers and their trucks are allowed into Chico. He said companies “operating marginally” and forced to meet city conditions will sacrifice equipment safety to stay competitive.

Mayor Dan Herbert answered that “those cheap trucks and equipment will cause them to lose out because the consumer will decide” who picks up the trash.

Councilmember Steve Bertagna told Mannel, “Your vehicles drive too fast down my street. How could diversity [of companies] be any worse?”

Mark Stamen, a professor of environmental studies at Chico State University, told the council its own staff report shows deregulation is not the direction the state is headed. He said the haulers’ large fixed costs associated with the delivery of service make them utilities just like power, water and cable companies, whose businesses are regulated by government.

“They are natural monopolies,” Stamen said. “We call them ‘utilities,’ and traditional market regulations do not apply. If you have fixed costs suddenly spread over a smaller number of customers, the rates will rise.

“I know you’d like to get rid of this issue, but you can’t,” Steman told the council.

Before he could finish, however, his allotted three minutes were up, and Mayor Herbert cut him off, even though nobody else was in line to speak. Later, an angry Stamen asked, with that type of reception from the mayor, who in his right mind would want to get involved in City Council meetings?

In the end the council voted 4-3, with Herbert, Keene, Bertagna and Larry Wahl in favor of deregulation. The issue of vegetation pickup rates, currently subsidized by the city at $3,000 per month, will be brought up at the council’s Aug. 21 meeting. Those rates are now limbo because the city is now out of the rate-regulation business.