TO: John Lawton, City Manager
& City Commissioners
FROM: David V. Gliko, City Attorney
DATE: November 17, 1999
SUBJECT: Franchising Waste Haulers
You have requested legal authority for the imposition of a franchise on waste haulers in the City.
Municipalities may grant a franchise by ordinance. 7-1-4123, (8), MCA. An exclusive franchise may not be granted without a vote of the electorate. 7-5-4321, MCA.
In Montana, a franchise has been defined as a "special privilege conferred by the government on an individual which does not belong to the citizens generally." D&F Sanitation v. Billings, 219 Mont. 437, 441; Glodt v. City of Missoula, 121 Mont. 178. A franchise for waste haulers would grant a privilege of using city streets for business transportation purposes. Defining a class for "special privilege" would require very careful drafting - see 4 below.
Notwithstanding the bare statute authorizing municipalities to enact franchises, legal obstacles appear:
The law has always been and most recently repeated in State Department of Highways v. Helena, 193 Mont. 441 (1981):
The state has ownership and control of all city streets in Montana, and if the state chooses to delegate authority to the city to control its streets, the city becomes a trustee thereof.
- "Garbage disposal service operators are required to get a certificate of public convenience and necessity issued by the PSC prior to doing business. Section 69-12-314, MCA. The certificate grants the carriers the right to operate their businesses upon the public streets." Barney v. Board of Railroad Comissioners (1932), 93 Mont. 115; D&F Sanitation v. Billings (1986), 219 Mont. 437, 446.
- 7-1-111, MCA, provides: "A local government unit with self-government powers is prohibited from exercising the following: . . . (4) any power that prohibits the grant or denial of a certificate of public convenience and necessity." Obviously, the grant or denial of a franchise might be said to interfere with the state issuance of a certificate of public convenience.
- Montana Constitution, Article II, Section IV, provides: "No person shall be denied the equal protection of the law." Question: Does requiring a franchise for "waste haulers" as opposed to other vehicular users of city streets violate the equal protection clause? Such an issue involves a determination of whether a classification is legally permissible and if the classification is reasonable. The test is whether the classification is rationally related to a legitimate governmental interest. Tipco Corporation, Inc. v. Billings, 197 Mont. 339, 345. In our case, facts would have to be identified setting apart the "waste haulers" as a class reasonably distinguished for special treatment as opposed to all other vehicular haulers of similar gross vehicle weight, size, etc.
- Since the Montana Court has ruled that the holder of a certificate of public convenience grants the hauler a right to operate their business upon public streets, a municipal franchise requirement may raise an issue of a denial of a property right without due process of law guaranteed by Article II, Section 17 of the Montana Constitution.
I am not aware of a similar franchise having been enacted by any municipality in Montana and given the weight of legal authority cited above, I believe it is indicative of a doubtful expectation of surviving a legal test. Should the city enact such a franchising ordinance, I would expect a legal test, i.e. a declaratory judgment action, would be immediate and prudent for all parties before legal interests are abused and liability incurred.