scope:

When government entities decide to expand their jurisdictional boundaries and provide waste services in the new areas, private solid waste collection companies can be displaced, often without compensation for their 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 that will be provided by the city or town, including solid waste collection. Private companies are not compensated for lost revenue. They also may include the imposition of taxes and fees for government-provided service regardless of who provides that service. Arrangements with the private sector then become financially burdensome and private companies are displaced.

• A local government (city, town, borough, county, solid waste authority, etc.) decides to grant one private firm an exclusive franchise or contract, displacing all other firms with solid waste collection arrangements 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 firms with prior collection arrangements without compensation.

When private firms are displaced, significant business losses can occur. For these companies, the years of building a competitive business are lost. A private firm cannot plan for the potential losses caused by displacement. 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.