Can a Tennessee municipality grant an exclusive contract for roll-off dumpster service, and is HB 1293 (which lets any private hauler operate anyway) constitutional?

Plain-English summary

Representative Bill Sanderson asked five questions about whether a Tennessee municipality can grant an exclusive contract or franchise for roll-off dumpster service (the open-top containers used for renovation and construction debris). The AG's answers:

Q1 (Public services?) Yes. Tennessee municipal charter statutes (Tenn. Code Ann. §§ 6-2-201(12) and (13), parallel provisions in §§ 6-19-101 and 6-33-101) authorize exclusive franchises for "public utilities and public services." Waste collection promotes public health and welfare, so it is a "public service" even though not every resident uses it.

Q2 (Federal antitrust?) No violation. The state-action doctrine of Parker v. Brown and its progeny immunizes municipalities acting under "clearly articulated and affirmatively expressed" state policy to displace competition. Tennessee's express grants of waste-collection authority and franchise authority make exclusivity a foreseeable result. Michigan Paytel Joint Venture v. City of Detroit (6th Cir. 2002) and Active Disposal, Inc. v. City of Darien (7th Cir. 2011) directly support this.

Q3 (Tennessee anti-monopoly clause?) Generally no violation. Art. I, Section 22 prohibits monopolies that infringe on "common rights." Whether roll-off services are a common right is debatable, but even if so, exclusive franchises survive when they have a "reasonable tendency" to promote public health, safety, or welfare. Checker Cab v. City of Johnson City; Noe v. Town of Morristown. Most other states have upheld exclusive waste contracts under this standard.

Q4 (Resident fees to contractor plus payment to city?) Fact-dependent. If the resident charges are reasonably related to service value, OK. If the structure looks like revenue generation rather than service provision, vulnerable.

Q5 (HB 1293 constitutionality?) Vulnerable to Contract Clause challenge. HB 1293 would let any private entity provide a roll-off container "notwithstanding any other law to the contrary," which would functionally void existing exclusive franchises. Both the U.S. and Tennessee Constitutions prohibit laws impairing contractual obligations. Whether HB 1293 survives depends on case-specific factual analysis under Allied Structural Steel and Energy Reserves Group: substantial impairment, then significant and legitimate public purpose. Retroactive application is the main risk.

Currency note

This opinion was issued in 2017. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule mentioned here.

Background and statutory framework

A roll-off dumpster is the open-top wheeled container used for project-based waste removal: renovation debris, construction sites, large cleanouts. Whereas traditional residential trash service is continuous, roll-off service is on-demand. Many Tennessee municipalities have considered or awarded exclusive franchises for this service, which has generated industry pushback from independent haulers.

Roll-off as "public service." No Tennessee case has directly construed "public services" in the municipal franchise statutes. The AG borrowed from "public purpose" jurisprudence, which is generous: anything promoting public health, safety, morals, general welfare, security, prosperity, and contentment of municipal residents. Knoxville Hous. Auth. v. City of Knoxville; Shelby Cnty. v. Exposition Co.; Nichol v. Mayor of Nashville. Proper waste collection serves public health, so roll-off service is a public service. Not every resident has to use the service for it to be "public." Pack v. Southern Bell.

State-action antitrust immunity. Parker v. Brown immunizes states from federal antitrust laws under dual sovereignty. Town of Hallie v. City of Eau Claire and FTC v. Phoebe Putney Health Sys. extend immunity to municipalities acting under a "clearly articulated and affirmatively expressed" state policy to displace competition. City of Columbia v. Omni Outdoor Advertising says general grants of local authority do not suffice; suppression of competition must be a "foreseeable result" of what the statute authorizes. Tennessee's combination of waste-collection authority and explicit franchise/exclusive contract authority satisfies this. Michigan Paytel (6th Cir.) upheld a similar Detroit prison-telephone exclusive contract; Active Disposal (7th Cir.) directly upheld Illinois municipal roll-off exclusive contracts.

Tennessee anti-monopoly clause (Art. I, § 22). Defines monopoly as "an exclusive right granted to a few, which was previously a common right." James Cable Partners; Watauga v. Johnson City; Leeper v. State. City of Memphis v. Memphis Water Co. held no common right to use city streets for water mains existed, so an exclusive water franchise was not a monopoly. Noe v. Town of Morristown and Checker Cab v. City of Johnson City found a common right in slaughtering and taxi services. For roll-off dumpsters, the common-right question is genuinely debatable.

But even if there's a common right, the legislature can authorize a monopoly that has "a reasonable tendency to aid in the promotion of the health, safety, morals and well being of the people." Checker Cab; Landman v. Kizer; Esquinance v. Polk Cnty. The test is whether the monopoly has a "real tendency" to advance those interests, "and whether that is really the end had in view." Other states have routinely upheld exclusive waste contracts on public health grounds. The AG cited cases from Arkansas, Illinois, Michigan, North Dakota, Ohio, Oregon, and Washington.

Resident-fee structure. Reasonable service-related fees are fine. Revenue extraction without a service relationship is suspect.

HB 1293 and the Contract Clauses. Both constitutions prohibit laws impairing contracts. Allied Structural Steel Co. v. Spannaus: threshold inquiry is whether the law substantially impairs a contractual relationship. Energy Reserves Group, Inc. v. Kansas Power & Light Co.: if the contract terms recognize extensive regulation and foreseeable changes, the law doesn't impair the reasonable expectations. U.S. Trust Co. v. New Jersey: if substantial impairment exists, the law must further a significant and legitimate public purpose. Retroactive application of HB 1293 to existing exclusive franchises would face the strongest challenge. Prospective application is safer.

Common questions

Q: Can a Tennessee city give one company exclusive rights to provide roll-off dumpsters?
A: According to this opinion, yes, under §§ 6-2-201(12), (13) and related provisions. Roll-off services are "public services" within the franchise statute.

Q: Does this violate federal antitrust law?
A: No. State-action immunity protects municipalities acting under clear state authority to displace competition. Parker v. Brown and its progeny.

Q: Does this violate the Tennessee anti-monopoly clause?
A: Generally no, when the exclusive franchise has a reasonable tendency to promote public health or safety. The analysis is fact-specific.

Q: Can the city charge residents and also collect a fee from the contractor?
A: It depends. If the charges are reasonably related to service value, generally OK. Pure revenue extraction without service relationship is vulnerable.

Q: What about HB 1293, which would let any company provide roll-off services?
A: According to this opinion, the bill could violate the U.S. and Tennessee Contract Clauses if applied retroactively to existing exclusive franchises. Prospective application is on safer ground.

Q: Why is this a Contract Clause issue?
A: Existing exclusive franchises are contracts. A statute that "notwithstanding any other law" lets competitors operate freely would substantially impair the value of those contracts. The remedy would require the legislature to show a significant public purpose for the impairment.

Citations and references

Statutes and constitution:
- Tenn. Code Ann. §§ 6-2-201(12), (13), (19)
- Tenn. Code Ann. §§ 6-19-101(12), (13), (19)
- Tenn. Code Ann. § 6-33-101(a)
- Tenn. Const. art. I, §§ 20, 22
- U.S. Const. art. I, § 10
- Sherman Act §§ 1, 2 (15 U.S.C. §§ 1, 2)
- Clayton Act § 3 (15 U.S.C. § 14)
- FTC Act § 5 (15 U.S.C. § 45(a))

Cases (selected):
- Parker v. Brown, 317 U.S. 341 (1943)
- FTC v. Phoebe Putney Health Sys., Inc., 568 U.S. 216 (2013)
- Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985)
- Community Communications Co. v. Boulder, 455 U.S. 40 (1982)
- City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365 (1991)
- Michigan Paytel Joint Venture v. City of Detroit, 287 F.3d 527 (6th Cir. 2002)
- Active Disposal, Inc. v. City of Darien, 635 F.3d 883 (7th Cir. 2011)
- James Cable Partners, L.P. v. City of Jamestown, 818 S.W.2d 338 (Tenn. Ct. App. 1991)
- City of Memphis v. Memphis Water Co., 52 Tenn. 495 (1871)
- Noe v. Town of Morristown, 128 Tenn. 350, 161 S.W. 485 (1913)
- Checker Cab v. City of Johnson City, 187 Tenn. 622, 216 S.W.2d 335 (1948)
- Pack v. Southern Bell Tel. & Tel. Co., 215 Tenn. 503, 387 S.W.2d 789 (1965)
- Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978)
- Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400 (1983)
- United States Trust Co. v. New Jersey, 431 U.S. 1 (1977)
- First Util. Dist. of Carter County v. Clark, 834 S.W.2d 283 (Tenn. 1992)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2017/op17-043.pdf

Original opinion text

Full opinion text unavailable from the official source. See the linked PDF or landing page above for the complete text.

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
September 25, 2017
Opinion No. 17-43
Municipal Award of Exclusive Contract or Franchise for Roll-Off Dumpster Services

Question 1
Do roll-off dumpster services constitute "public services" under Tenn. Code Ann. §§ 6-2-201(12) and (13) or similar statutory provisions?

Opinion 1
Yes.

Question 2
Does an exclusive contract or franchise for roll-off dumpster services under Tenn. Code Ann. §§ 6-2-201(12) and (13) or similar statutory provisions violate federal antitrust law?

Opinion 2
No.

Question 3
Does an exclusive contract or franchise for roll-off dumpster services under Tenn. Code Ann. §§ 6-2-201(12) and (13) or similar statutory provisions violate article I, section 22 of the Tennessee Constitution?

Opinion 3
A municipality may award an exclusive contract or franchise for roll-off dumpster services without violating article I, section 22 of the Tennessee Constitution.

Question 4
Do Tenn. Code Ann. §§ 6-2-201(12) and (13) or similar statutory provisions authorize a municipality to execute an exclusive contract or franchise agreement that requires residents of the municipality to pay a fee directly to the contractor or franchisee for roll-off dumpster services when the municipality receives a sum certain from the contractor or franchisee for each roll-off dumpster rental?

Opinion 4
The legality of any such agreement would depend on the facts and circumstances surrounding the execution of the particular agreement, as well as the specific terms and conditions of the agreement.

Question 5
Does House Bill 1293 of the 110th General Assembly, as amended, violate any provision of the United States Constitution or Tennessee Constitution?

Opinion 5
House Bill 1293, as amended, could be vulnerable to a challenge that it violates Article I, Section 10 of the United States Constitution and article I, section 20 of the Tennessee Constitution.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

LAURA T. KIDWELL
Senior Counsel

Requested by:
The Honorable Bill Sanderson
State Representative
204 War Memorial Building
Nashville, Tennessee 37243