How L.A. Plans to Trash Dozens of Local Businesses

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The city is glossing over crony capitalism and union patronage with nods to environmentalism.

July 2, 2014

waltarrrrr / photo on flickrLos Angeles hopes to divert 90 percent of its trash from landfills by 2025 as part of its "Zero Waste" program. According to one study commissioned by the city, L.A. achieved 76 percent diversion in 2012.

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The latest step the city claims will get Los Angeles closer to this goal is a franchise system for trash haulers who serve apartment complexes and local businesses. Currently, residential customers who are in single-family homes or duplexes are served by the city's Department of Sanitation. Commercial properties and apartment complexes are served by private trash haulers.

Under the new plan, approved by the Los Angeles City Council in April, private haulers will continue to serve these customers, but they'll have to bid for franchise licenses and pay the city to do so. These franchise licenses will be exclusive. Private trash haulers will no longer compete for customers. Instead the city will be split into 11 districts, and each district will be served by a single company. No trash company may earn more than 49 percent of the accounts under the new system.

What does turning private trash haulers into the equivalent of exclusive city subcontractors have to do with the environment anyway? The Bureau of Sanitation's 153-page manual provided to companies looking to bid for these franchises describes some of the recycling aims. Companies are required to have trash trucks that are certified as low-emission vehicles and are less than eight years old. The companies are expected to continue any recycling and organic waste diversion from commercial establishments (restaurants, for example) who are already receiving this service and they're expected to expand the city's diversion efforts to help the city reach its "zero waste" goal.

Responding to questions sent via e-mail, Los Angeles Bureau of Sanitation Director Enrique Zaldivar explained, "Franchise holders will have to use efficient routing and clean fuel vehicles which will decrease emissions as well as damage to city roads. They will have to provide clean vehicles and bins, removing graffiti and keeping them in good repair. Customer service will be tracked and haulers will be responsible for providing excellent and responsive service, including a customer service office in each zone, online service requests and bill payment, and the use of apps and other media to upgrade customer communications."

Still don't understand why the city needs to turn to exclusive district-based monopolies to achieve this goal? You're not the only one. Ron Saldana, executive director of the Los Angeles County Disposal Association, said his group had been lobbying for non-exclusive franchises, which is how Los Angeles County operates for commercial properties (though it does have exclusive franchise agreements for residential customers).  

"It was working very, very well," Saldana said. "What it does is preserve a competitive marketplace. You have to meet certain requirements. If you qualify, you can apply for a franchise. The only difference is the exclusivity and there is no competition."

These exclusive agreements will last for 10 years, with options for two five-year extensions. The competition will be to get the contracts; after that, there's no more marketplace. Given that there are only 11 districts, dozens of existing L.A. trash companies will be rendered unable to legally haul commercial and apartment-complex waste. Saldana predicts that this system could shut down about 40 businesses for good.

The environmental argument in support of exclusive franchises is that they will reduce the total number of garbage trucks on the road, prevent overlapping routes, and reduce air pollution further.

Proponents claim the changes will eliminate tons of greenhouse gas emissions. Saldana calculates, however, that 80 percent of current commercial and multi-family trash hauling is done by four or five businesses. Presumably these big players will be fighting over the contracts, while the smaller companies who never contributed nearly as much pollution may be shut out entirely.

Zaldivar's response to concerns that these franchises will push out small haulers is to point out that most of these businesses depend on the construction and demolition industries for jobs, and this type of work is not going to be affected by the shift to franchises. He added, "There are a number of small- to medium-sized local hauling companies that intend to propose on the small franchise areas, or are soliciting the ability to be a subcontractor for the proposers, which we encourage."

But while the city and supporters are praising the new trash plan's environmental components, huge swathes of its regulations have absolutely nothing to do with recycling or waste diversion. By turning these waste haulers into city contractors, Los Angeles is able to push onto them all sorts of additional labor union-favored rules.

As city contractors, trash companies will be required to comply with the city's living wage ordinance and pay its employees at least $11.03 per hour if they also have health benefits, $12.28 if they do not. Under the city's First Source Hiring Ordinance, trash companies will be required to inform the city's Development Department Workforce Development System of any job openings, interview any applicants referred to them by the city, and explain their reasons if they decline to hire any of them.

Potential trash franchises also have to have prove that they've signed a "labor peace agreement." These are agreements in which the union agrees not to picket or arrange any work stoppages at a company in exchange for certain concessions, such as the business accepting card checks for unionization votes rather than secret balloting or agreeing to maintain a position of neutrality during efforts to organize.

The requirement for a labor peace agreement doesn't tell trash companies what they have to concede, nor does it give them any authority to require a union to approve an agreement. But they must have a labor peace agreement in order to be awarded a contract. Thus, these rules essentially give unions veto power over anybody looking to land a franchise. No wonder labor union members were

celebrating outside City Hall when the council approved this new system.

These agreements are notable in areas where labor unions have significant power, particularly in Los Angeles. The Los Angeles Board of Airport Commissioners approved similar demands of airline and airline service providers at Los Angeles International Airport in May, with the endorsement of Los Angeles Mayor Eric Garcetti.

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  • |7.2.14 @ 4:36PM|#

    When the inevitable happens, progs will blame market failure, just as they do with cable monopolies.

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  • Invisible Finger|7.2.14 @ 4:50PM|#

    When Detroit was the richest city per capita in the US, do-gooders of all stripes thought the city residents could therefore pay for all kinds of high-falutin' ideas.

    L.A. is a rich town now. Detroit is their model.

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