16 May 2007 Seattle Nixes Competition
With a nod to economic favoritism, Seattle hands exclusive rights for removal of commercial and residential waste to two politically-connected corporations, while forbidding small local trash haulers the chance to compete legally.
Seattle Eliminates Businesses for the Long Haul
Ron Haider of Haider Construction in Seattle, Washington could rely on Joe Ventenbergs’ Kendall Trucking to haul construction-related debris from his work sites more quickly, less expensively and, he said, more reliably than competitors Rabanco, Ltd., and Waste Management of Washington (WMW). Haider said, “Joe provided better service at a better price and worked in a timely fashion. He was more environmentally conscious, too.” But Haider’s ability to work with Ventenbergs began to be curtailed in April 2001 when the Seattle City Council entered into a seven-year contract with the two other companies for the removal of the city’s commercial and residential waste.
An ordinance in Seattle’s municipal code mandated that all hauling of commercial and residential waste was exclusively delegated to Rabanco and WMW, affiliates of the national companies Allied Waste Industries and Waste Management Incorporated, respectively. Each company was awarded a territorial monopoly (Rabanco in the northern part of the city, WMW in the southern). No other companies were legally allowed to collect or remove these types of debris. Initially, smaller local haulers like Kendall could still legally haul construction waste – but that soon changed.
In October 2002, largely as a result of successful lobbying efforts by Rabanco and WMW, Seattle’s municipal code was amended to expand the scope of its contract with the two companies to include construction waste. For Ventenbergs, the City Council’s action was a drastic blow to his business, as the removal of construction waste is Kendall’s main service. In February 2003, city officials informed small business haulers that most of their work would be eliminated. Privately-owned businesses like Haider’s would be required to use the services of either Rabanco or WMW. Jeanette Peterson, an attorney representing both Ventenbergs and Haider, commented that, “with the stroke of a pen, the city of Seattle [had] transformed a legal business into an illegal business.”
Based on the assertion that the municipal code constricts economic liberty, Haider and Ventenbergs filed a lawsuit against the city in May 2003, claiming that the change in the municipal code creates territorial monopolies and is therefore unconstitutional. Haider also asserts he has the right to hire the hauling company of his own choice. In addition, the suit argues, the city is engaging in economic favoritism by creating an oligopoly over the waste-hauling industry that benefits Rabanco, WMW and their parent companies. City Councilwoman Margaret Pageler disagrees with Haider and Ventenbergs, saying, “We’d like to be kind to small-business people, but in fact we have a contract that’s consistent with state law, and the ordinance simply brought the city law in compliance with the contract and the state law that precedes it.”
On February 23, 2004 the King County Superior Court in Seattle ruled that Haider and Ventenbergs were not entitled to relief under the privileges and immunities clause in Washington’s state constitution. The Washington State Court of Appeals Division I upheld the ruling in February 2005, and the territorial monopolies over hauling construction waste in Seattle continue.
Sources: The Seattle Times (February 25, 2004; February 15, 2005), Seattle Post-Intelligencer (May 16, 2003), Cascade Policy Institute, The Institute for Justice, Ron Haider, Seattle City Council, Jeanette Petersen
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