Stericycle Of Wa, Inc., Appellant V. Wa Utilities & Transportation Commission, Et Al.,respondents (Majority)

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F_ ILE- D COU T OF APPEALS DWIS" M 11 2015 SEP - 9 IN THE COURT OF APPEALS OF THE STATE OF WASHIN DIVISION II No. 46100 -5 -II STERICYCLE OF WASHINGTON, INC., Appellant, PM PUBLISHED OPINION WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION and WASTE MANAGEMENT OF WASHINGTON, INC., Respondent. SUTTON, J. — the Washington Stericycle of Washington Inc. appeals the superior court' s order affirming Utilities and Transportation Commission' s final order granting Waste Management of Washington Inc.' s application for non-exclusive statewide authority to provide biomedical waste collection statutory authority, ( 2) services. Stericycle argues that the Commission ( 1) exceeded its decided that biomedical waste collection customers would_ benefit from market competition without substantial evidence to support that decision, and ( 3) acted arbitrarily and capriciously. We hold that the Commission acted within its authority under the plain language of RCW 81. 77. 040 to grant Waste Management' s application after it determined that Stericycle was not providing service to the satisfaction of the Commission and that its decision was based upon substantial evidence and was not arbitrary or capricious. Therefore, we affirm. A, 1 li: 55 No. 46100 -5 -II FACTS I. THE COMMISSION' S HISTORICAL EVALUATION OF BIOMEDICAL WASTE SERVICE The Commission regulates solid waste collection services under chapter 81. 77 RCW. To operate in Washington, solid waste companies must first obtain a certificate of authority from the PCN) require the company' s operations. Commission that " public convenience and RCW 81. 77. 040. The Commission began issuing PCN certificates of authority to companies necessity" ( providing specialized services for biomedical waste collection in the 1980s following concerns about re the spread of disease Am. Envtl. Mgmt. 30, 1990)); AR at posed of this Order M.V. G. No. 1452, Corp., 632 ( In by disposing re waste at like regular garbage.' 4 ( Wash. Utils. & AR at 595 ( In Transp. Comm' n Nov. Ryder Distrib. Res. Inc., Order M.V.G. No. 1596, at 6 ( Wash. Utils. Transp. Comm' n Jan. 25, 1993)). Although neighborhood garbage collection service companies typically operate in a monopoly in a given territory, the Commission questioned whether universal collection of biomedical waste by a single company Distrib. Res., Order M.V.G. No. 1596, was useful at in this specialized service. AR at 632 ( Ryder 6). The Commission thus developed different factors for granting a PCN certificate to collect biomedical waste than for granting certificates to collect regular neighborhood garbage. AR 632 ( Ryder Distrib. Res., Order M.V.G. No. 1596, at at 6). In 1990, the Commission explained its belief that in the context of neighborhood solid waste collection, [ RCW 81. 77. 040] contemplates an exclusive grant of authority as the best and most efficient way of Biomedical waste encompasses animal waste, waste contaminated with "biosafety level 4 disease waste" ( blood and other excretions), pathological waste ( biopsies, tissues, cultures and stocks, human blood and blood products, and other anatomical waste), 70- 041. 2 and sharps waste. WAC 480- No. 46100 -5 -II serving all customers in a given territory. In this general context, it is assumed that all or most people and businesses in a given territory are also customers needing garbage service. Under these circumstances, an exclusive grant of authority in a given territory promotes service, efficiency, consistency and is generally in the public interest. The collection of medical waste is quite a different situation. Customers are only a small percentage of the total business in any given territory.... Therefore, while sound policy and economic reasons exist in favor of exclusive authority for typical residential or commercial collection in a specific territory, those reasons are less compelling in this new, specialized area. The Commission is not ready to say that a grant of one application for statewide authority would preclude a grant of others, and will consider this element in future proceedings. AR at 574- 75 ( In re Sure - Way Incineration, Inc., Order M.V.G. No. 1451, at 16- 17 ( Wash. Utils. Transp. Comm' n Nov. 30, 1990)). To grant a PCN certificate to a company that will operate in a territory already served by a certificate holder, the Commission must determine whether the existing company or companies provide " service to the satisfaction of the [ C] RCW 81. 77. 040. 2 omission." mIn 1993, the Commission stated that when determining whether to grant a PCN certificate for biomedical waste collection service, unlike its determinations on whether to grant PCN authority for neighborhood garbage collection, it would not " limit its consideration to evidence of service failures of the sort that usually are significant in neighborhood garbage collection service." Med. Servs., Inc., Order M.V. G. No. 1663, at 10 ( Wash. Utils. & AR at 668 (In re Sureway Transp. Comm' nNov. 18, 1993)). 2 RCW 81. 77. 040 provides as follows, When an applicant requests a certificate to operate in a territory already served by a certificate holder under this chapter, the commission may, after notice and an opportunity for a hearing, issue the certificate only if the existing solid waste collection company or companies serving the territory will not provide service to the satisfaction of the commission or if the existing solid waste collection company does not object. 3 No. 46100 -5 -II Rather, it existing related would also consider " need - service reasonably serves the needs Med. Servs., Order M.V. G. No. 1663, testimony at sufficiency of the specialized market." Thus, it 10- 11). of [biomedical] waste generators of service considerations - - regarding their would give " whether the AR at 668- 69 ( Sureway considerable weight to service requirements." AR at 743 ( In re Pet' n.ofComm' n Stafffor a Decl. Ruling, Docket No. TG -970532, Decl. Order, at 10 n. l (Wash. Utils. & Transp. Comm' n Aug. 14, 1998)). By 1998, the biomedical waste service industry had grown " into a highly competitive industry as a result of the Commission interpreting RCW 81. 77. 040 consistently with the unique requirements and attributes of Ruling, the service." AR at 744 ( In re Pet' n of Comm' n Stafffor a Decl. Docket No. TG 970532, Decl. Order, at 11). It is within this historical backdrop that we consider Stericycle' s appeal of the Commission' s approval of Waste Management' s application for non- exclusive statewide biomedical waste service authority. II. STERICYCLE' S BIOMEDICAL WASTE SERVICE MARKET COMPETITION Stericycle Commission first has provided granted it such statewide biomedical authority in 1995. waste collection service since the Stericycle competed with another company which also held statewide biomedical collection authority, but in 2000 Stericycle acquired that competitor, making Stericycle currently the sole solid waste company with statewide authority to collect biomedical waste. Waste Management competed with Stericycle under its G-237 certificate before Stericycle' s parent corporation bought Waste Management' s biomedical waste operations in 1996. In 2011, the Commission allowed Waste Management to resume biomedical waste collection services under G- 237 over Stericycle' s objection. G- 237 granted Waste Management authority to 0 No. 46100 -5 -II collect biomedical waste in territory that encompasses 80 percent of the total amount of biomedical produced waste . in Washington. After Waste Management resumed competition with Stericycle for biomedical waste collection service, Stericycle' s revenues and total number of customers increased. In December 2011, Waste Management applied to the Commission to extend its authority to collect biomedical waste statewide. Stericycle and several other smaller regional companies These companies provide biomedical waste collection services within Waste objected. Management' s proposed expanded territory. In December 2012, the Commission conducted four days of evidentiary hearings on Waste Management' s application for statewide nonexclusive authority for biomedical waste service. III. WASTE MANAGEMENT' S APPLICATION FOR NON- EXCLUSIVE STATEWIDE AUTHORITY FOR BIOMEDICAL WASTE SERVICE At the hearings on Waste Management' s application, eight biomedical waste generators testified that they wanted a market competitor to Stericycle for a variety of reasons: 1) competition would ensure they receive the best service and prices, ( 2) the larger businesses wished to use the same biomedical waste collection provider across the state for the sake of efficiency, ( 3) dissatisfaction desire to exert leverage over with Stericycle' s scheduling, pricing, and customer service, ( 4) a Stericycle, ( 5) a desire for access to another service provider as a backup in case of catastrophe, and ( 6) for one generator, reduction in pollution emissions because Waste Management' s facilities are closer to its location. Two biomedical waste generators testified that they experienced ongoing billing and customer service problems as Stericycle customers. 5 No. 46100 -5 -II A Waste Management account developer, Jeff Norton, who previously worked for Stericycle, testified that, as a Waste Management employee, he witnessed a change in Stericycle' s practices when Waste Management began competing with Stericycle. When Norton worked for Stericycle, he received complaints about the containers Stericycle provided to customers for collection. According to Norton, Stericycle did not want to change their collection container design because of its investment in the old container. Within a month of Waste Management' s entry into the market with a different collection container design, however, Stericycle began offering the same new container that Waste Management offered and reduced its rates on that container, matching Waste Management' s rate. Norton acknowledged, however, that as a Waste Management employee he lacked personal knowledge of Stericycle' s reason for the collection container change. Stericycle provided counter testimony that in response to customer inquiries it had been considering offering the new plastic container before Waste Management entered the market. IV. THE COMMISSION' S APPROVAL OF WASTE MANAGEMENT' S APPLICATION The administrative law judge ( ALJ) granted Waste Management' s application in an initial order. The ALJ ruled that Stericycle' s billing and customer service issues did not make its service unsatisfactory to the Commission. Instead, the ALJ found that under RCW 81. 77.040, Stericycle was not providing service to the satisfaction of the Commission based upon the generators' testimony of a need for a competitive alternative and Waste Management' s evidence of marketplace benefits of a competitor to Stericycle. The ALJ recognized that there was no prior Commission ruling recognizing a competitive market, standing alone, as a justification for authorizing competing statewide authority, but the rel No. 46100 -5 -II ALJ reasoned that much had changed since the beginning of the biomedical waste industry to justify the need for competition. The ALJ stated explicitly that the Commission would no longer rely on a previous decision that dismissed competition as an insufficient reason to find unsatisfactory service. The ALJ concluded that Waste Management proved that consumers need its statewide services for public convenience and necessity and that the existing providers were not providing service to the satisfaction of the Commission. The ALJ also found . hat the public t benefit of a competitive market outweighed " unsubstantiated claims" of economic harm to the existing companies and that Waste Management had demonstrated its financial and operational fitness.3 Clerk' s Papers ( CP) at 43. The objectors, including Stericycle, petitioned the Commission for administrative review of the initial order. In its final order, the Commission affirmed and adopted the entirety of the initial order, concluding that the initial order " properly reflect[ ed] the intent of prior Commission decisions determining when existing carriers will provide service to the satisfaction of the Commission." CP at 21- 22. Finding of fact 3 in the initial order stated that Waste Management demonstrated the consumer need for, and positive results from, its expansion into the. statewide hazardous bio - collection services market." CP at 43. The Commission found that its authority to grant competing biomedical waste collection service " is not limited to circumstances of inadequate service." CP at 26. It viewed such a conclusion not as a change to prior decisions but an adaptation of regulation to the realities of the market." CP at 26. The Commission found that 3 Stericycle does not appeal the ALJ' s findings of fact and conclusions of law that the public benefit of a competitive market outweighed economic harm to existing companies and that Waste Management was financially and operationally fit to provide biomedical waste services. 7 No. 46100 -5 -II substantial evidence supported Waste Management' s application for non- exclusive statewide authority based upon the generators' testimony of a need for an additional service provider. The objectors petitioned the superior court for judicial review. The superior court affirmed the Commission' s final order. Only Stericycle appeals. ANALYSIS Stericycle claims the Commission exceeded its statutory authority in its interpretation of the Commission' s governing statute, RCW 81. 77. 040, and claims that the Commission reversed its precedent without substantial evidence or reasoned explanation. Stericycle challenges finding of fact 3 of the initial order, which the Commission adopted in the final order. This finding states that consumers would benefit from Waste Management' s expanded authority. We reject Stericyle' s challenges. I. JUDICIAL REVIEW OF RCW 81. 77. 040 A. CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY When deciding whether to issue, a PCN certificate to a biomedical waste service company, the Commission must first analyze five factors under RCW 81. 77. 040.4 If the service territory that a biomedical waste .company seeks to operate in is already served by another PCN certificate 4 Stericycle does not appeal the Commission' s determination that the evidence satisfied these five factors as to Waste Management' s application for nonexclusive statewide authority for biomedical waste service certificate to RCW 81. 77.040 provides that the Commission may issue. a PCN a waste collection in the service collection. area company to be served and the after cost it analyzes for that following five factors: ( 1) the present 2) the estimated cost of facilities to a statement of the company' s assets that will be expended 4) the company' s prior experience in the field, and ( 5) the sentiment in the community to be served as to the necessity of the proposed service. be used on the for collection and collection and disposal, ( 3) the service, ( disposal plant, ( 3 No. 46100 -5 -II holder and that holder objects to competition, the Commission may issue the PCN certificate for competing authority only if, after notice and opportunity to be heard, the Commission determines that the existing " satisfaction of company or companies serving the territory will not provide service to the the RCW. 81. 77. 040. commission." Stericycle appeals the Commission' s determination that it was not providing service to the satisfaction of the Commission. B. STANDARD OF REVIEW Judicial review of agency action is governed by the Administrative Procedure Act (APA).' RCW 34.05. 510. In reviewing agency action under the APA, we stand in the same position as the superior court. Pal v. Dep' t of Soc. & Health Servs., 185 Wn. App. 775, 780- 81, 342 P. 3d 1190 When a statute directs that the agency shall exercise its discretion, we limit our function 2015). to determining whether that agency exercised its discretion within the law and we do not overrule the agency' s party discretion. asserting it. The burden of demonstrating invalidity is on the RCW 34. 05. 574( 1). Cornelius v. Dep' t of Ecology, 182 Wn.2d 574, 585, 344 P. 3d 199 ( 2015). RCW 34. 05. 570( 3) adjudicative 1) the final provides the only circumstances in which we may overturn an agency proceeding. order is " outside Stericycle' s challenges fall under four of these provisions: the [ Commission' erroneously interpreted the law, ( 3) 4) the final order is arbitrary s] statutory authority," ( 2) the Commission the final order is unsupported by substantial evidence, and and capricious. RCW 34. 05. 570( 3)( b), ( d), ( challenges fail. Chapter 34. 05 RCW. 0 e), ( i). Stericycle' s No. 46100 -5 -II II. THE COMMISSION PROPERLY INTERPRETED ITS STATUTORY AUTHORITY We review an agency' s interpretation or application of the law de novo. Chicago Title Ins. Co. v. Office oflns. Comm' r, 178 Wn.2d 120, 133, 309 P. 3d 372 ( 2013). The purpose of statutory interpretation is to implement the legislature' s meaning and intent. O.S.T. v. Regence BlueShield, 181 Wn.2d 691, 696, 335 P. 3d 416 ( 2014) ( BlueShield). If.the statute' s meaning is plain on its face, we give effect to that plain meaning and our inquiry ends, as we do not construe the statute otherwise. BlueShield, 181 Wn.2d at 696. We use the ordinary meaning of the statute' s language, the context of the statutory provision, related provisions, and the statutory scheme as a whole to determine plain meaning. Dellen Wood Prods., Inc. v. Dep' t of Labor & Indus., 179 Wn. App. 601, 615, 319 P. 3d 847, review denied, 180 Wn.2d 1023 ( 2014). Stericycle argues that the Commission misinterpreted the plain and unambiguous language, service to the biomedical satisfaction of the waste service [ C] ommission," under RCW 81. 77. 040 when it granted statewide authority to Waste Management. Stericycle is correct that the statute is plain and unambiguous, but that plain language does not reach the result Stericycle advances. A. PLAIN LANGUAGE OF RCW 81. 77. 040 Stericycle argues that ( 1) the legislature has required a monopoly marketplace in the solid waste industry and ( 2) Commission to " service" under RCW 81. 77. 040 must be interpreted as a directive to the examine only the " attributes" of the services provided by existing collection companies to decide whether customers are satisfied with the existing companies. Br. of Appellant at 20. The plain language of RCW 81. 77. 040 does not support either argument. The legislature has not mandated a monopoly market in the solid waste collection industry. The plain language of RCW 81. 77. 040 clearly contemplates competing certificate authority if the 10 No. 46100 -5 - II Commission decides that existing .service providers are not operating to the Commission' s No language in RCW 81. 77. 040 mandates a monopoly model on solid waste satisfaction. collection service. Instead, it provides that the Commission may grant an application for competing authority if existing solid waste collection " company or companies" serving the territory will not provide service to the satisfaction of the Commission. RCW 81. 77.040. The plain language of RCW 81. 77. 040 reserves consideration of whether service is satisfactory to the Commission. By phrasing the key statutory requirement of RCW 81. 77. 040 as service," satisfactory Stericycle glosses over who is to decide whether existing biomedical waste companies are providing adequate service. Service is satisfactory ifthe existing provider is serving the community " to the satisfaction of the [ C] ommission" not, as Stericyle' s argument suggests, to the satisfaction Appellant at of 20 (" the customers themselves. RCW 81. 77. 040 ( emphasis added); e. g. Br. of The Commission' s interpretation of RCW 81. 77. 040 would read the ` satisfactory service' requirement out of the statute."). Stericycle acknowledges that the Commission is the entity that must be satisfied, but argues that " service" should be defined narrowly so that the Commission' s discretion is restrained to focus on factors that point to whether customers are satisfied with existing service. That focus does not adhere on the to the plain language phrase " service to the of RCW 81. 77. 040. The Commission and Waste Management focus satisfaction of the [ C] ommission," asserting that this language gives the Commission broad authority to determine its satisfaction before granting competing authority. RCW 81. 77. 040. We agree that the Commission has broad authority to determine to its satisfaction whether service is satisfactory. 11 No. 46100 -5 -II B. THE COMMISSION PROPERLY EXERCISED ITS DISCRETION UNDER RCW 81. 77. 040 Stericycle heavily relies Superior Refuse Removal, Inc. on Transportation Commission, 81 Wn. meaning of " service to the App. satisfaction of v. Washington Utilities & 43, 913 P. 2d 818 ( 1996), the only case to examine the the [ C] ommission" under RCW 81. 77. 040. There, we affirmed the Commission' s denial of an application for a PCN certificate to provide competing garbage collection services to commercial businesses in Yakima. Superior Refuse, 81 Wn. App.. at 44. We held that the Commission' s findings of fact were supported by substantial evidence in the record that the existing service provider' s service deficiencies alleged by the petitioner were not widespread and therefore the Commission' s conclusion that the existing provider was providing service to the " satisfaction of the [ C] ommission" was supported by its findings of fact. Superior Refuse, 81 Wn. App. at 49. Stericycle attempts to analogize this case to Superior Refuse because the Commission found that Stericycle' s alleged billing and customer services issues did not support the need for Waste Management' s statewide authority. But Superior Refuse is inapplicable here because that case was concerned only with neighborhood garbage collection service and disposal, and the Commission has differentiated biomedical waste from neighborhood garbage collection due to the unique attributes of the biomedical waste collection industry. AR at 575 ( Sure -Way Incineration, Order M.V. G. No. 1451, at 17). Superior Refuse did not discuss the Commission' s reasoning on the specialized needs of biomedical waste generators. The Commission did not exceed its statutory authority under RCW 81. 77. 040 by allowing competition in the biomedical waste industry and in exercising its discretion granting Waste Management statewide biomedical waste service 12 authority. Eight biomedical waste generators No. 46100 -5 -II testified that they were unhappy with their limited market choices for disposing of their specialized Each of them testified that they wanted or needed a statewide market competitor to waste. Stericycle. The record demonstrates that the Commission properly exercised its discretion under the plain language of RCW 81. 77. 040 by deciding that Stericycle was not providing service to the satisfaction of the Commission. III. THE COMMISSION' S ORDER IS SUPPORTED BY SUBSTANTIAL EVIDENCE AND IS NOT ARBITRARY OR CAPRICIOUS Stericycle next challenges the Commission' s finding of fact 3 in the initial order and adopted by the final order that Waste Management demonstrated consumer need for, and positive results from, its expansion into statewide biomedical waste collection. Stericycle argues that the Commission' s ruling was arbitrary and capricious because it reversed what Stericycle characterizes as a previous interpretation of RCW 81. 77. 040 without substantial evidence or reasoned analysis. We hold that the Commission' s challenged finding of fact 3 was based upon substantial evidence, and its ruling was not arbitrary or capricious. A. SUBSTANTIAL EVIDENCE We review an agency' s findings of fact for substantial evidence. Thomas v. Dep' t ofEmp' t Sec., 176 Wn. sufficient to App. 809, persuade a 813, 309 P. 3d 761 ( 2013). fair- minded person of Substantial evidence is evidence that is its truth. Cornelius, 182 Wn.2d at 607. The substantial evidence standard of review is highly deferential to the agency' s action. ARCO Prods. Co. v. Wash. Utils. & Transp. Comm' n, 125 Wn. 2d 805, 812, 888 P. 2d 728 ( 1995). On appeal, we will not invalidate an agency' s discretionary decision without a clear showing of abuse. ARCO Prods., 125 Wn.2d at 812. In deciding whether substantial evidence supports an agency' s finding 13 No. 46100 -5 - II of fact, we will not reweigh evidence or substitute our judgment for the agency' s determination of witness credibility. Thomas, 176 Wn. App. at 813. Unchallenged findings of fact are verities on appeal. Pal, 185 Wn. App. at 781. Substantial evidence on the record supports the Commission' s finding of consumer need for and benefit from competition with existing service providers for biomedical waste collection. Eight generators of biomedical waste testified that they wanted and needed a competitor to Stericycle for a variety of reasons. The Commission found that the public benefits of a statewide outweighed " unsubstantiated competitive market companies, including Stericycle. CP because Stericycle does at not assign error 43. claims" of economic harm to the existing Importantly, this finding of fact is a verity on appeal to it. Pal, 185 Wn. App. at 781. Jeff Norton testified that he believed Stericycle' s decision to provide the same new waste collection container that Waste Management began providing at a lower rate than Stericycle' s other rates was a direct reaction to Waste Management' testimony, 176 Wn. we App. do at s competition. Although Stericycle presented counter evidence to Norton' s not reweigh evidence 813. or make our own credibility determinations. Thomas, . Finding of fact 3 is supported by substantial evidence. Stericycle also argues that the final order' s paragraphs 12, 13,. and 15 reference " factual allegations" that are not on the record and that Stericycle did not have an opportunity to rebut. Br. of Appellant at 36. We disagree. Paragraph 12 states, We further observe that the development of competition in former monopoly utility markets was only just beginning in Washington in the late 1980' s Due to a lack of experience with the impacts of allowing more than one company to provide service, the Commission was properly cautious and limited competitive entry to demonstrated instances in which multiple providers would serve consistent with the public interest. The Commission thus required that a new entrant in the biomedical waste collection market be willing and able to and early 1990' s. 14 No. 46100 -5 -II provide service that was not being provided in the requested territory as determined by the needs of the customers of that specialized service. CP at 25- 26. Paragraph 13 states, Twenty years later, the Commission has greater experience and comfort with competition in certain utility markets. Biomedical waste collection " has evolved into a highly competitive industry as a result of the Commission interpreting RCW 81. 77. 040 consistently with the unique requirements and attributes of the service." [ In re Pet`n of Comm' n Stafffor a Decl. Ruling, Docket 970532, Decl. Order at 11 ( Wash. Utils. & Transp. Comm' n Aug. 14, 1998).] TG Stericycle currently competes with another certificated company to provide such state— including service throughout the vast majority of the with Waste Management for the last two years in territory that includes 80 percent of the in Washington— without generators economic viability or ability to any adverse impact on the companies' provide service. To the contrary, Waste Management' s re- entry into the biomedical waste collection market in the Company' s existing solid waste collection service territory has resulted in demonstrated benefits to consumers without detriment to Stericycle' s revenues or customer count. CP at 26 ( footnotes omitted). Paragraph 15 states, that an applicant can demonstrate that existing companies will not provide service to the satisfaction of the Commission by proving unmet need for a competitive alternative and that the new entrant will We view this conclusion[, enhance effectiveness of competition,] as less of a change to the Commission' s determinations two decades ago than as an adaptation of regulation to the realities of the market. Existing biomedical waste collection companies will not provide service to the satisfaction of the Commission if the consumers of that specialized service need, and an additional company can provide, and an effective competitive alternative. We continue to adhere to the statement Stericycle quotes from the Commission' s 2010 report to the legislature that the rate and service regulations applicable to ferry, garbage collection, and bus industries are intended to provide a, surrogate for the pricing discipline that would be exerted by a competitive marketplace. But where competition can or does exist, as in the biomedical waste industry, regulation should ensure that consumers reap the benefits of multiple service providers by encouraging an effectively competitive marketplace. collection 15 No. 46100- 5- I1 We will not use the statute to shield incumbent companies from the greater service option availability and pricing discipline that such a marketplace is intended to exert. CP at 26- 27 ( footnotes and internal quotation marks omitted). Paragraphs 12, 13, and 15 are not new factual allegations; they merely recite the evolution of the biomedical waste industry as compared to regular neighborhood garbage collection, and the Commission' s response to that evolution: These recitations could not have come as a surprise to After multiple Commission orders since 1990 that reference the uniqueness of the Stericycle. biomedical waste industry, as compared to neighborhood garbage collection, and the Commission' s statement that it would consider competition in future decisions, Stericycle cannot plausibly claim that it had no notice that the Commission might consider the need for competition and, as we have already held, substantial evidence supports the generators' need and desire for a competitive alternative to Stericycle. AR at 575 ( Sure -Way Incineration, Order M.V.G. No. 1451, at 17); AR of Comm' at n 667 ( Sureway Staff for a Med. Servs., Order M.V. G. No. 1663, Decl. Ruling, at 10); AR at 744 ( In re Pet' n Docket No. TG 970532, Decl. Order, at 11). The Commission' s challenged finding of fact is supported by substantial evidence on the record and the Commission' s orders did not present new facts. B. ARBITRARY OR CAPRICIOUS Finally, Stericycle argues that the Commission' s final order was arbitrary and capricious. because the Commission' s initial and final orders in this case changed the way it defined " service" 16 No. 46100 -5 -II without sufficient reasoning based on substantial evidence.6 Because the Commission' s final order is based upon its precedent of treating biomedical waste collection services differently than neighborhood garbage collection and its order contains sufficient reasoning to justify its decision, the Commission' s final order was not arbitrary or capricious. An agency acts arbitrarily and capriciously when its action is " willful, unreasoned, and taken without regard Ass' n v. Dep' t to the attending facts of Ecology, 172 Wn. App. Northwest Sportfishing Indus. or circumstances." 72, 90, 288 P. 3d 677 ( 2012). If the record demonstrates two possible opinions, an agency' s action is not arbitrary or capricious if the agency gave the action due Distrib. consideration even v. if we might believe it was erroneous. Ass' n of Wash. Spirits & Wine Wash. State Liquor Control Bd., 182 Wn.2d 342, 358, 340 P. 3d 849 ( 2015). Stare decisis, the principal that reviewing courts will overturn precedent only if it is incorrect or harmful, plays only a limited role in administrative 167 Wn.2d 341, 343, 217 P. 3d 1172 ( 2009); Bd. 172 Wn.2d 144, 173 differently and should n. 9, agency decisions. Kittitas County v. K Wash. Growth Mgmt. Hearings 256 P. 3d 1193 ( 2011). strive for equal City of Federal Way v. Koeing, treatment. Agencies should not treat similar situations Seattle Area Plumbers v. Wash. State Apprenticeship & Training Council, 131 Wn. App. 862, 879, 129 P. 3d 838 ( 2006); Kittitas County, 172 Wn.2d at 173 n. 9. Our scope of review under the arbitrary and capricious standard is very 6 Stericycle argues that the Commission' s decision was made without authority because it did not finding that " services provided by existing carriers are deficient." Br. of Appellant at 29 ( citing Krakenberger v. Dep' t of Pub. Works, 141 Wash. 168, 169, 250 P. 1088 ( 1926)). This make a specific argument is misplaced because the Commission explicitly found that a need for Waste Management' s services and a competitive alternative to existing service providers outweighed any adverse economic impact on those existing services. Because the Commission used its discretion to consider competition in its evaluation of service, finding of fact 3, discussed above, constitutes a sufficient finding about existing service. 17 No. 46100 -5 -II narrow and the party asserting it carries a heavy burden. Ass' n of Wash. Spirits & Wine, 182 Wn.2d at 359. As recited above, the Commission' s analysis in granting PCN certificates to biomedical waste service providers the need for biomedical M.V.G. No. 1451, at began over two decades ago. waste collection services. 16- 17). In 1990, the Commission first recognized AR at 574- 75 ( Sure -Way Incineration, Order Because it determined that biomedical waste service did not fit the typical monopoly model of neighborhood garbage collection, the Commission stated that it would consider " in future territory. AR at proceedings" allowing biomedical service companies to compete in a given 575 ( Sure -Way Incineration, Order M.V.G. No. 1451, at 17). Stericycle trivializes the Commission' s statement that it would consider competition in the future as dicta and characterizes the respondents' argLunents as a " gross exaggeration" of a mere " possibility" that the Commission could authorize additional statewide service in the future and not a general statement of pro -competition policy. Br. of Appellant at 39 n. 125. The Stericyle' s Commission' argument. s subsequent decisions since Sure -Way Incineration contradict The Commission has repeatedly built upon its initial recognition that competition could be beneficial in the biomedical waste service context. In 1993, the Commission explicitly recognized that strict adherence to the monopoly model in the biomedical waste collection industry would not necessarily best achieve the legislature' s purpose in chapter 81. 77 RCW. AR explained that it at 667 ( Sureway Med. Servs., Order M.V. G. No. 1663, would not limit its neighborhood garbage collection. 10). consideration to " service at 9). The Commission failures" of the sort common to AR at 668 ( Sureway Med. Servs., Order M.V.G. No. 1663, at The Commission also explained that in granting PCN authority to a biomedical waste service 11 18 No. 46100 -5 - II company it would considerations - - market." broaden its consideration to include " need related sufficiency of service whether the existing service reasonably serves the needs of the specialized AR at 668- 69 ( Sureway Med. Servs., Order M.V.G. No. 1663, at 10- 11). In 1994, the Commission implemented this reasoning when it granted competing authority for biomedical waste collection services over the objection of two existing companies because the applicants demonstrated that they would provide service not offered by the existing companies. AR at 704- 05 ( In re Med. Res. Recycling Sys., Inc., Order M.V.G. No. 1707, at 3- 4 ( Wash. Utils. Transp. Comm' n May 23, 1994)). In 1995, the Commission granted Stericycle its certificate for non-exclusive statewide authority to provide biomedical waste collection services. AR at 722 ( Ryder Distrib. Res., Order M. V. G. No. 1761, but that at 12). The Commission noted that competition can be detrimental to business competition can also bring " benefits to consumers," which had been demonstrated on the record before it. AR at 723- 24 ( Ryder Distrib. Res., Order M.V.G. No. 1761, at 13- 14). By 1998, the Commission recognized that the biomedical waste collection industry had evolved into a highly competitive industry as a result of the Commission interpreting RCW 81. 77. 040 consistently with the unique requirements and attributes of the service." AR at 744 ( In re Pet' n of Comm' n Stafffor a Decl. Ruling, Docket No. TG -970532, Deel. Order, at 11). The initial order on this docket number noted that while RCW 81. 77. 040 " expresses a preference for monopoly service in the collection of solid waste," the Commission had interpreted the statute according to the unique needs of biomedical waste generators, giving their testimony " considerable weight" when deciding if existing companies' service was satisfactory to the Commission. Reply 19 No. 46100 -5 -II Br. of Appellant, App. A, Tab 13 ( In re Pet' n of Comm' n Stafffor a Decl. Ruling, Docket No. 970532, Initial Order, TG - at 3 n. l ( Wash. Utils. & Transp. 7 Comm' n Oct. 29, 1997)) . In a 2011 order in Stericycle' s earlier challenge to Waste Management' s certificate authority, the Commission again noted that it regulates the biomedical waste collection industry differently than neighborhood garbage collection by authorizing competition because competition in the biomedical protecting the waste public collection health and industry " promotes higher quality of service in terms of safety." AR at 767- 68 ( Stericycle of Wash., Inc. v. Waste Mgmt. of Wash., Inc., Docket No. TG -110553, Order 2, 13, 2011)). " biomedical 16). at 14- 15 ( Wash. Utils. & Transp. Comm' n July Commission policy has historically encouraged competition in the provision of waste services." AR at 769 (Stericycle of Wash., Docket No. TG -110553, Order 2, at The Commission refused to erect barriers to entry into the biomedical waste collection market, contrary to Stericycle' s urging. AR at 769 ( Stericycle of Wash., Docket No. TG -110553, Order 2, at 16). Stericycle competition" does relies not on the Commission' s demonstrate a need for statement an in 1993 that " mere preference for additional service provider. AR at 698- 99 I The declaratory order in docket number T.G-970532 did not adopt the initial order wholesale, but the final order does not contradict this rule in the initial order. AR at 734 (In re Pet' n of Comm' n Stafffor a Decl. Ruling, Docket No. TG -970532, Deel. Order). 20 No. 46100 -5 - II Sureway Med. Serv., Order M.V.G. No. 1674, at 4- 5). 8 Given the context of the Commission' s historical evolution in regulating this particular industry, this isolated quote is not persuasive. Furthermore, the Sureway Medical Services quote appears after the Commission' s reiteration that it gives considerable weight to the needs of generators of specialized waste; the testimony in that case, however, did Sureway not demonstrate a great need Med. Serv., Order M.V. G. No. 1674, at for competing PCN authority. 5). AR at 699 Here, as we have already concluded, substantial evidence on the record supports the Commission' s finding of a need for competition, not mere preference for it. Based on this history, recited throughout the final order in this case, the Commission' s finding that Stericycle' s service was unsatisfactory based upon the waste generators' testimony about their need for competition was not arbitrary or capricious. The final order reiterated that the Commission' s satisfaction with service for specialized waste generators is measured according to those customers' needs and that eight witnesses testified to the need for a statewide competitive 8 The Commission explained that t]he satisfactory nature of service by existing providers of specialized solid waste collection services will be measured according to the specialized needs of customers. The Commission will give considerable weight to the judgment of biohazardous waste generators regarding the sufficiency of existing service, because they are professionally involved in health care, and are in a unique position to evaluate the risks and benefits of collection and disposal services.... The applicant [ in a previous order] made a very persuasive demonstration that existing service, companies, although providing " satisfactory" physical collection were not providing service that sufficiently met the specialized requirements of the customers.... The final order does not depart from the Commission' s consistent view that for competition[] does not demonstrate a need for an additional mere preference carrier. AR at 698- 99 ( Sureway Med. Serv., Order M.V.G. No. 1674, at 4- 5). 21 No. 46100 -5 -II The Commission acknowledged Sureway Medical Services' s statement that " mere alternative. preference for competition" is not sufficient to find unsatisfactory service, but decided to revisit that decision and then described the history of the biomedical waste industry, noting the Commission' s encouragement of competition in this industry. CP at 36- 37. From this history, the Commission concluded that its prior decision dismissing competition as an insufficient factor in granting PCN authority in the biomedical waste services industry no longer reflects " the realities of the current marketplace." CP at 38. This reasoned analysis is contrary to Stericycle' s argument that the final order is arbitrary and capricious, and its argument fails. We affirm the Commission' s final order granting Waste Management statewide authority to provide biomedical waste collection service because the Commission did not exceed its statutory authority, and its decision was based on substantial evidence and was not arbitrary or capricious. SUTTON, J. We concur: BJ ; KG' I, A.C. J. LLQ, J. 22

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