FISCAL IMPACT:
Permit fees will be proposed to provide funding to support implementation and enforcement of Ordinance No. 2017-16. To the extent that the estimated fees will cover actual costs, adoption of this Ordinance is not expected to impact the General Fund. If the proposed fee is not adequate to fund this program, General Fund money (or some other source of funding) may be needed.
BACKGROUND:
This report addresses changes to proposed Ordinance No. 2017-16, which would establish a permit program for non-franchised solid waste haulers.
On September 26, 2017, Ordinance No. 2017-16, as introduced on July 11, 2017 (the “Ordinance”), was presented to the Board for adoption. At the meeting, the Board received and considered a number of proposed revisions to the Ordinance that had been jointly submitted in writing by representatives of Garaventa Enterprises, Inc., and Republic Services, Inc. (the “Joint Haulers”) and verbally by legal counsel on behalf of the Joint Haulers. Garaventa Enterprises, Inc., has a County franchise to collect solid waste. Republic Services, Inc., is the parent company of three solid waste companies that also have County solid waste franchises. Following a review of these proposed changes and upon consideration of staff comments, the Board directed that the Ordinance be revised.
In response, staff has prepared revised Ordinance No. 2017-16 (the “Revised Ordinance”). The Revised Ordinance is attached to this report as Exhibit A and recommended for adoption. A redlined version of the Revised Ordinance, which shows the changes made from the version introduced on July 11, is attached as Exhibit B.
Staff has also prepared and attached as Exhibit C a color-coded mark-up of the Ordinance that illustrates revisions proposed since September 26, and the status of those revisions. Many post-September 26 revisions were made in response to the direction given by the Board on September 26. Other changes, some proposed by staff and others proposed by the Joint Haulers, are not related to the Board’s September 26 direction. Staff and the Joint Haulers concur with some of these other changes, but others are in dispute. The color-coded markup includes comments that reflect staff’s position on the changes that staff disputes and explanation of new changes by staff. The disputed changes are not included in the Revised Ordinance presented for adoption. The mark-up version is provided to facilitate the Board’s discussion of the disputed changes.
Below is a brief discussion of significant changes that appear in the Revised Ordinance presented for adoption, and significant points of contention between staff and the Joint Haulers.
1. Significant Changes in Revised Ordinance
Significant revisions reflected in the Revised Ordinance include:
Section 418-2.004 Permit requirement
- The effective date of the permit requirement was changed from January 1, 2018, to March 1, 2018, to provide the Health Services Department adequate lead time to develop the permit application form, information materials, website updates, fix the amount of the performance bond, establish the permit fee, and conduct outreach and education on the new requirements.
Section 418-2.006 Territorial limits; solid waste types
- This section contains additional clarifying language about what a permit would not authorize.
Section 418-2.008 Exemptions
- The exemption for collection and transport of solid waste under a federal, state or local permit has been revised to apply only to federal and state permits where those permit requirements preempt the County’s permit requirement.
- A new exemption for collection and transport of solid waste under a local permit has been added, but is limited to permits issued by sanitary districts, community services districts and solid waste joint powers authorities.
- An exemption for the collection and transport of solid waste generated in a mechanized manufacturing process or at a publicly operated treatment works was revised to apply to the collection and transport of solid waste generated at a manufacturing plant, a term commonly understood to mean an industrial facility consisting of land, buildings and machinery used to make or assemble products.
- The collection and transport of solid waste generated at a publicly operated treatment works is now covered under a separate exemption.
Section 418-2.010 Application
- This section was revised to require the applicant to provide additional identifying information, including business entity information and motor carrier identification numbers if applicable, and to call out vehicles that have the capacity to provide roll-off box services.
Section 418-2.014 Permit issuance; grounds for denial
- This section was revised to require that a valid certificate of liability insurance be provided by the applicant as a condition of receiving a permit. Proof of insurance will not be required at the time of application, but will be required before a permit will be issued. Failure to provide the required proof of insurance would be grounds for denial of the permit.
- This section was also revised to clarify that an overlap between an applicants service territory and a franchise hauler's service territory would be grounds for denial only if the applicant wants to haul exactly the same waste types (and nothing more) as a franchise hauler in only the franchisee's territory. With other overlaps, the permit will need to be tailored by staff to avoid conflicts.
Section 418-2.016 Terms and Conditions
- A subsection that describes the terms of a permit (i.e., the information on the face of the permit) was added to this section.
- The conditions subsection was modified in two significant respects. It now contains a condition to carry proof of liability insurance in each motorized vehicle. Second, containers of one cubic yard or larger that are used in the business will need to be marked with specified identifying information.
Section 418-2.022 Revocation
- The revocation section now includes a subsection that expressly discusses a ground for revocation based on a permittee’s operations that infringe upon the exclusive rights of a franchised solid waste hauler. The provision also discusses how evidence of such activities, and evidence of a franchisee’s rights and privileges under a franchise agreement, would be considered in revocation proceedings.
418-2.024 Prohibitions
- The requirement to transport waste only to specified solid waste or recycling facilities was moved from the permit conditions subsection to the prohibitions section in order to subject a broader range of persons – i.e., all persons required to have permits, as opposed to only the permittees – to this requirement. Staff determined that this change would provide law enforcement with a more effective tool in addressing unpermitted transfer stations.
2. Significant Joint Hauler Revisions Disputed by Staff
Staff’s comments on each revision proposed by the Joint Haulers that is not included in the Revised Ordinance are included in the attached color-coded markup. Additional comments on significant areas of dispute follow.
Industrial waste exemption
On September 26, the Board rejected the Joint Haulers’ proposal to eliminate the exemption from the permit requirement for the collection and hauling of industrial waste, which was described in the Ordinance at that time as waste generated in a “mechanized mechanical process.” The Board was receptive, however, to a clearer description of this kind of waste, and the Joint Haulers were to provide a definition for consideration. The Joint Haulers instead proposed, again, to delete the exemption.
Staff remains opposed to the elimination of this exemption. Neither the generators nor haulers of this type of waste were included in any of the outreach conducted by staff in the course of developing this ordinance. This type of waste is also not found illegally dumped or at illegal transfer stations; therefore, requiring permits to haul it is unlikely to further the stated goal of combating illegal dumping. Some wastes hauled from manufacturing facilities must be hauled in specialized trucks or require special handling.
When the Joint Haulers failed to provide alternative language, staff rewrote the exemption to apply to all waste generated at manufacturing plants. This exemption is clearer and would eliminate the need for haulers of assorted types of waste generated at these facilities to obtain permits to collect the types of waste not covered under the exemption.
Publicly operated treatment works waste exemption
Staff objects to the hauler's proposed edit to this exemption because it is too vague and also not consistent with the Board's 9/26/17 direction. A non-franchised hauler who services a publicly operated treatment works would not know, based on the terms of this ordinance, whether or not a permit was required. This could lead to enforcement challenges for the County. Consequently, staff removed the hauler’s proposed edit.
Source-separated recyclable material exemption
From staff’s perspective, the Joint Hauler’s proposed elimination of the exemption for collecting and transporting source-separate recyclable material would not yield positive results.
The free market approach to the hauling of source-separated recyclables has not proven to be problematic from an environmental standpoint. Because the material has inherent value, it is not the sort of material that is taken to illegal transfer stations or illegally dumped. For this reason, to the extent that customers are paying haulers to collect this material, requiring these haulers to obtain permits would impose regulations and extra costs on these haulers but not yield the environmental results that staff seeks through the adoption of a waste hauling ordinance.
The Joint Haulers have previously shared their concerns about the poaching of recyclables that the Joint Haulers have exclusive rights to collect; however, due to a restriction in the Vehicle Code, the permit requirement will apply only to vehicles for hire – i.e., vehicles operated by businesses that are performing services for paying customers. This restriction, referenced in Section 418-2.028 of the Revised Ordinance, will, as a practical matter, exempt poachers from the permit requirement.
The vehicle for hire restriction will also exempt from the permit requirement charities and others who collect recyclables without charge. This exemption will apply regardless of whether an express exemption for the collection and transport of this material is included in the final version of the ordinance. The express exemption, however, serves as a billboard to charities and others who perform this service for free that they will not need to obtain permits to continue their activities. Without this billboard, they may erroneously conclude that they do need permits. This error could, in turn, unnecessarily impact their operations and fundraising strategies, and leave customers with fewer options for disposing of these materials.
Unlike loads of mixed materials or wastes, source-separated recyclables do not need to be sorted at a transfer station or other processing facility to facilitate recovery. Source-separated recyclable materials can be taken directly from the pick-up location to recycling facilities since the customer has sorted material by type prior to collection.
There may be numerous haulers that would cease to collect source-separated recyclables from existing customers if subject to the added cost/burden of the ordinance’s permitting requirements. This could include collection of certain recyclable materials that are not being collected for recycling by other haulers or seasonally high quantities of a recyclable material that exceeds the amount the Franchise Hauler will pick-up at no additional charge.
Finally, recycling haulers have not been included in the outreach conducted by staff. If the Board is inclined to require them to get permits, staff recommends that this be considered as an amendment after staff has had an opportunity to reach out to them to advise them of the proposal and gather their feedback.
Liability Insurance Requirement Upon Application
The Revised Ordinance includes a requirement that haulers have liability insurance coverage at the limits of $1 million per claim and $1 million in the aggregate, consistent with the Board’s September 26 direction.
The Joint Haulers now desire that an applicant have this insurance at the time of submittal of a permit application. Staff is opposed to this requirement because it is too onerous and of no apparent public benefit. If the purpose of the liability insurance is to protect people from harm caused by a permittee, there is no apparent reason to require an applicant to have this insurance in effect before a permit is issued. It would be sufficient from a public protection standpoint to have this requirement take effect at the time of permit issuance, and staff has included this requirement in the Revised Ordinance.
Staff also notes that requiring a non-franchised solid waste hauler to have liability insurance in effect at the time of permit issuance is consistent with the insurance requirements that apply to the Joint Haulers. The Joint Haulers must have insurance during the terms of their franchises, which are akin to permits. Prospective solid waste franchisees are not required to have insurance in place when they begin the process to obtain a franchise from the County.
Staff Recommendation re: Further Ordinance Revisions
If the Board would like to consider incorporation of additional changes to the Revised Ordinance, in response to revisions requested by the Joint Haulers, staff proposes that any such changes be considered as possible amendments following adoption of the Revised Ordinance. This would allow allow staff to begin implementing the permit requirement prior to March 1, 2018, which is the date the permit requirement is set to take effect under Section 418-2.004. The Board could direct staff to return at a later date, perhaps one year from now, after assessing the effect of the Revised Ordinance, to identify additional changes that could be included in an ordinance amendment to address other revisions proposed by the Joint Haulers.
Performance Bond and Fee Hearing
Section 418-2.018 of the Revised Ordinance would require a permittee to file with the County a performance bond of the type and in the amount set by Board resolution. Section 418-2.020 requires payment of a permit fee established by Board resolution. Following adoption of the Revised Ordinance staff intends to return to the Board with recommendations for action on these items.
California Environmental Quality Act
For the purposes of compliance with the California Environmental Quality Act (CEQA), the project consists of the Ordinance as well as adoption of the bond and fee resolutions. Based on the record before the County, Conservation and Development Department staff has determined that the whole of this project is exempt from review under CEQA under Section 15061(b)(3) and Section 15273(a)(1) of the CEQA Guidelines. Section 15273(a)(1) specifies that fees established by public agencies to meet operating expenses are exempt. Section 15061(b)(3) provides that an activity is exempt if there is no possibility that the activity in question may have a significant effect on the environment.
CONSEQUENCE OF NEGATIVE ACTION:
Should the Board decide not to adopt the ordinance as introduced and direct staff to further modify the ordinance, staff may not have adequate time to develop the program, redeploy staff, establish the permit fee and performance bond, and conduct outreach and education in time to issue permits by March 1, 2018.
CLERK'S ADDENDUM
FOUND that the adoption of Ordinance No. 2017-16, is exempt from environmental review under Section 15061(b)(3) of the California Environmental Quality Act Guidelines;
ADOPTED Ordinance No. 2017-16, as modified today, which will establish a permit program for specified non-franchised solid waste haulers.