scope:

When government entities decide to expand their jurisdiction and provide waste services, private solid waste collection companies are displaced often without compensation for lost business. This occurs when:

• A city or town annexes an unincorporated area. Typical annexation statutes require that the new area receive substantially the same services as residents within the city or town. These provisions usually terminate existing arrangements with the private sector for those services already provided by the city or town, including solid waste collection, without providing for lost revenue. They also may mean the imposition of taxes and fees for government-provided service regardless of who provides that service. Arrangements with the private sector then become fi nancially burdensome and private companies are displaced.

• A local government (city, town, borough, county, solid waste authority, etc.) decides to give one private fi rm an exclusive franchise or contract, displacing all other fi rms with solid waste collection arrangements and without compensation.

• A local government decides to begin providing solid waste collection services or expand such services to other areas within the government's jurisdiction using its own equipment and personnel, displacing all private fi rms with prior collection arrangements and without compensation.

When private fi rms are displaced, signifi cant business losses can occur. These include years of building a competitive business. Easily quantifi able losses include investment in trucks, equipment, and physical plant. Equipment purchased to honor contracts and franchises become surplus, lowering their market value often below indebted worth. There also are less quantifi able losses such as the value of goodwill with a customer base and the loss of expertise when personnel are laid off. For small waste service fi rms, these losses may cause bankruptcy. For a large fi rm, the sizable debt can jeopardize operations in other communities.

A method by which a private fi rm can plan for the potential losses caused by displacement does not exist. A company that has set reasonable prices based on the market and that complies fully with applicable regulations will not be protected against lost revenue. Management expertise cannot prevent displacement. Insurance and other types of protection are not available to compensate for losses. In addition, the likelihood of displacement occurring has increased with the growth of special districts, regional authorities, and county waste management plans.