Opinion ID: 392693
Heading Depth: 2
Heading Rank: 2

Heading: Akron's Authority to Build the Plant and Restrict

Text: Competition Under State Law 11 Akron exercises its municipal powers under a grant of municipal home rule found in Ohio's Constitution. Article XVIII, § 3 reads: 12 Municipalities shall have authority to exercise all powers of local self-government and to adopt and enforce within their limits such local police, sanitary and other similar regulations, as are not in conflict with general laws. 13 Section 7 of Article XVIII authorizes municipalities to adopt charters for their government and, subject to the provisions of section 3 of this article, exercise thereunder all powers of local self-government. Ohio case law holds that these state constitutional provisions pass the sovereign power of municipal government ... directly from the people of the state to the people of the city and has the effect of delegating a part of the state's sovereignty to the city, State ex rel. Toledo v. Lynch, 88 Ohio St. 71, 102 N.E. 670 (1913), including the power to establish a municipal monopoly for the collection and incineration of garbage. State ex rel. Moock v. Cincinnati, 120 Ohio St. 500, 166 N.E. 583, cert. denied, 280 U.S. 578, 50 S.Ct. 31, 74 L.Ed. 628 (1929). 14 In addition, Ohio statutes delegate to municipalities the authority to regulate the disposal of garbage. Ohio Rev.Code § 715.43 grants municipalities the authority to provide for the collection and disposition of sewage, garbage, ashes, animal and vegetable refuse, dead animals, and animal offal, and may establish, maintain, and regulate plants for the disposal thereof. Similarly, Ohio Rev.Code § 717.01(C) empowers municipalities to (e)rect a crematory or provide other means for disposing of garbage or refuse.... 15 The District Court also found authority for the City to engage in the challenged activities in the legislation granting the Water Authority power to develop solid waste treatment facilities. Ohio Rev.Code § 6123.03 states that the Water Authority is established to protect health and aesthetic values through efficient methods of disposal ... or recovery of resources from solid wastes. The Authority is authorized to construct and maintain solid waste projects or to make agreements for their maintenance. 16 The Authority is empowered to make loans and grants and issue bonds to carry out the statutory purposes and to guarantee the feasibility of projects developed under this statute. Ohio Rev.Code §§ 6123.03, 6123.04, 6123.06 et seq. The statute authorizes the Water Authority to (m)ake and enter into all contracts and agreements and execute all instruments necessary or incidental to the performance of its duties and the execution of its powers under Chapter 6123 ..., § 6123.04(I), and to (d)o all acts necessary or proper to carry out the powers expressly granted in Chapter 6123.... § 6123.04(P). The District Court found that pursuant to this statutory scheme the state legislature had authorized the challenged anticompetitive activities.II. THE TAKINGS AND DUE PROCESS CLAUSE QUESTIONS 17 Control of local sanitation, including garbage collection and disposal, like fire and police protection, is a traditional, paradigmatic example of the exercise of municipal police powers reserved to state and local governments under the Tenth Amendment. Ordinances regulating garbage collection and disposal are rationally related to a matter of legitimate local concern. Courts in literally hundreds of reported cases have upheld the authority of local governments to monopolize and control local garbage collection by eliminating or restraining competition among private collectors. See Annots., Validity of Statutory or Municipal Regulations as to Garbage, 15 A.L.R. 287 (1921); 72 A.L.R. 520 (1931); 135 A.L.R. 1305 (1941). If any area of the law can be said to be well settled, this one is. 18 In three pertinent cases, two at the turn of the century in the United States Supreme Court, California Reduction Company v. Sanitary Reduction Works, 199 U.S. 306, 26 S.Ct. 100, 50 L.Ed. 204 (1905); Gardner v. Michigan, 199 U.S. 325, 26 S.Ct. 106, 50 L.Ed. 212 (1905), and one in the twenties in the Ohio Supreme Court, State ex rel. Moock v. City of Cincinnati, 120 Ohio St. 500, 166 N.E. 583, cert. denied, 280 U.S. 578, 50 S.Ct. 31, 74 L.Ed. 628 (1929), three cities, San Francisco, Detroit and Cincinnati, each decided to change local garbage collection and disposal practices by ordinance. Each established a reduction plant or crematory and gave one private company a monopoly over garbage collection. The ordinances put existing private garbage collectors out of business; they prohibited existing private collectors from competing with the private contractor who was given the municipal monopoly. In each case the private collectors claimed that the change constituted a taking without just compensation and an interference with established rights of private property, the right to compete in the market place, in violation of substantive due process under the Fourteenth Amendment. In the Cincinnati case the private contractors also argued that the city had not been delegated the authority under the state constitutional home rule provisions to restrain trade and that the ordinance violated the garbage collector's right to private property, and amounted to a special privilege and the creation of a monopoly in favor of the city's public contractor. 120 Ohio St. at 507, 166 N.E. 583. 19 After noting that (m)any of the questions involved in municipal sanitation have proved to be difficult of solution questions unsolved by experience or science the United States Supreme Court held that the creation of such monopoly cannot be properly regarded, within the meaning of the Constitution, as a taking of private property for public use, without compensation, simply because such garbage and house refuse may have had, at the time of its destruction, some element of value for certain purposes. California Reduction, supra, 199 U.S. at 320-21, 323, 26 S.Ct. at 104-105. As support for this result the Court quoted from Sedgwick's Treatise: 20 In Sedgwick's Treatise on Statutory and Constitutional Law the author says that the clause prohibiting the taking of private property without compensation is not intended as a limitation of those police powers which are necessary to the tranquillity of any well-ordered community, nor of that general power over private property which is necessary for the orderly exercise of all governments. It has always been held that the legislature may make police regulations, although they may interfere with the full enjoyment of private property, and though no compensation is made. 21 Id. at 324-25, 26 S.Ct. at 105-06. 22 The Supreme Court then went on to hold, according to well-settled principles, that the concept of substantive due process then in its heyday did not protect the property rights of the garbage collectors although the cities might have adopted a less restrictive solution to the problem. If it be said that the city might have adequately guarded the public health and at the same time saved the property rights, the Court concluded, the answer is that the city evidently thought otherwise, and we cannot confidently say that its constituted authorities went beyond the necessities of the case. Gardner, supra, 199 U.S. at 333, 26 S.Ct. at 109. The Ohio case came to the same conclusion: 23 (W)e do not enter upon a virgin field, since the overwhelming weight of authority, both state and federal, upholds the municipal right to regulate, supervise, and control sanitation, including the collection and disposal of garbage, under the police power of the city and state; and this may be done, notwithstanding the fact that garbage may have animal food value and the authority for such collection and disposal has been exclusively confided to a single person or agency. 24 120 Ohio St. at 507-08, 166 N.E. 583. Akron is an Ohio home-rule city, like Cincinnati, and on the basis of these three cases and the general law in this area we are satisfied that the city has not violated the takings or due process clause of the United States Constitution or the state home rule provisions by setting up a new reduction, thermal transfer, or energy recycling plant and by requiring that local garbage collectors bring all their garbage to the plant, including recyclable, or marketable, non-noxious garbage. 25 The plaintiffs and the American Paper Institute argue, however, that the increased value of wastes and the City's appropriation of that value render the old cases anachronisms that should be set aside. They argue that changed economic circumstances and heightened environmental concern make separating and selling such recyclable wastes as metal, paper, and cardboard more feasible now than in the past. They point out that there now exist competitive markets for recyclable wastes. They argue that Akron's purpose in acquiring a monopoly over garbage is not public health, as was the purpose in the old cases, but rather making its energy plant more profitable by insulating it from competition for raw materials. A monopoly imposed for that purpose, they argue, is neither necessary nor efficient. 26 The old cases are not anachronisms. They are not distinguishable on any of these grounds. The solid waste disposal problem is as serious today for cities as in the past, perhaps more serious. Landfill areas are running out and causing serious air and water pollution and aesthetic problems. The record demonstrates that this is the problem that caused Akron a heavily industrial area to plan and build its energy recycling plant. 27 Nor can the old cases be distinguished because of changed technology. The Supreme Court and other courts upheld governmental monopoly of solid waste years ago while recognizing explicitly that some wastes have value and could be sold in the market place. The record does not demonstrate that there has been a substantial change in the relative value of recyclable waste. Paper, cardboard boxes and metal have been a substantial part of garbage for years. We have perhaps become more conscious of the need to conserve and reuse resources, but this fact does not distinguish the old cases. 28 Neither does the fact that the City appropriates the value and sells some of the recyclable wastes, or chooses in manufacturing energy to burn some of the paper and cardboard rather than resell it, distinguish the old cases. Under these cases, the City could have simply taken over all garbage collection as in San Francisco, Detroit and Cincinnati, depriving existing collectors of any business at all. Here the greater would seem to include the lesser, and the fact that the City adopted a less restrictive alternative is not a valid distinction. Since the private collectors claim that they gave substantial rebates to their customers for the recyclable wastes they sold in the market place, at most the value of the recyclables appropriated by the city represents a licensing fee, service charge or tax imposed on persons in the City who generate and collect garbage. 29 The requirement that collectors deposit at the plant some valuable wastes, the sale of which supports the costs of incineration and the production of energy, is a valid exercise of the police power. The City may appropriate the value of marketable items abandoned by the owner and mixed in the stream of garbage in order to pay part of the general social costs of waste disposal. In addition Akron, a heavily industrial city, was faced with the loss of its main source of supply of energy for many of its downtown industrial and commercial businesses. The economic and social consequences of interruption in the supply of steam would be serious and justify the exercise of the police power challenged here. 30 The three cases discussed above also satisfy us that the involvement of the private company, Teledyne, in the operation of the plant in return for one-half of the profits from sale of recyclables is not improper under the takings or due process clause because it redistributes income from private collectors to Teledyne. In each of the cases discussed above the city granted a monopoly right to collect garbage to a single company, permitting that company alone to engage in a profitable business that had previously been done by several firms. The courts held that the public interest in regulation of the collection of garbage was so great that monopolization of the service and the attendant transfer of profits did not violate the takings or due process clause.