BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION


In the Matter of the Petition of  ) DOCKET NO. TG-970532       )
Commission Staff for a     )
Declaratory Ruling     ) STERICYCLE'S REPLY        ) MEMORANDUM AND
        ) REQUEST FOR         ) ORAL
        ) ARGUMENT
. . . . . . . . . . . . . . . . . . . )


 Stericycle of Washington, Inc. ("Stericycle"), through its attorneys Garvey, 
Schubert & Barer and Stephen B. Johnson,
respectfully submits this Reply Memorandum to the Commission.
1. The Parties Agree on All Major Legal Issues.
 The opening memoranda of the parties express general agreement with the 
Commission Staff that provisions of service agreements which require a fixed 
length of service, extended notice of termination and liquidated damages for 
early termination violate WAC 480-70-710(1) and/or RCW 81.28.040 and   -.080 
(made applicable to solid waste collection companies by WAC 480-70-440).  
 The opening memoranda also express agreement that the exception to RCW 
81.28.080, which permits solid waste collection companies to transport solid 
waste at "free or reduced rates" for "charitable purposes," does not apply to 
regular medical waste collection services provided to non-profit hospitals 
because (as the parties have stipulated) such transportation is not provided 

by the carriers "for charitable purposes."  WSHA Memorandum at 6-7 ("RCW 
81.28.080 . . . requires that the reason for charging the reduced rate must be 
for the carrier's charitable purposes. . . . In light of the stipulated facts, 
it would seem that carriers do not have 'charitable purposes' in charging 
reduced rates to hospitals"); BFI Memorandum at 6 ("BFI has difficulty 
defending the continued practice of maintaining the distinction between 
regulated and non-regulated rates for the 'charitable purpose' class of 
customers"); WRRA Memorandum at 3 ("WRRA feels that, at present, the offering 
of reduced rates to non-profit hospitals is in clear violation of 
well-established law regarding tariffs").  Although passing reference is made 
by BFI and WRRA to the "obligation to serve" issue raised in the Staff 
Petition, no facts have been presented to the Commission of the breach by an 
carrier of its "obligation to serve" or of any other justiciable issue related 
to the "obligation to serve."  As Stericycle noted in its initial memorandum, 
the Commission Staff previously indicated its intention to drop this issue from 
the proceeding for this reason.
 The only disagreements between the parties are with respect to how the 
Commission should implement the legal conclusions on which they agree.
2. Bifurcation vs. Unitary Resolution/Declaratory Order vs. Rulemaking 
Proceeding.
 WSHA argues that the provisions of existing service agreements which bind 
carriers and generators for a term of years 

are invalid and should be set aside in this declaratory proceeding.  However, 
while acknowledging that the "charitable purposes" exception does not apply to 
regular medical waste collection services provided to non-profit hospitals, 
WSHA argues that a rulemaking proceeding or some other mechanism for further 
"discussion among Commission staff, biomedical waste carriers and customers" is 
needed to deal with the consequences of this conclusion and certain ancillary 
issues raised in the Staff Petition.  The result of WSHA's position would be to 
immediately free all non-profit hospitals from their existing service 
agreements with the carriers, while forcing the carriers into a mad scramble to 
compete for the business of every non-profit hospital in the state at 
below-tariff rates.  The separation of the "service agreement/termination of 
service" issue from the "free and reduced rate" issue would lead to a 
potentially catastrophic rate war between the carriers which should be avoided 
by the Commission.
 BFI, WRRA and Stericycle agree that the Commission should resolve the "service 
agreement/termination of service" issue and the "free and reduced rate" issue 
in the same proceeding at the same time because of the practical impacts on the 
market place of voiding existing rate agreements without at the same time 
requiring the carriers to adhere to their published tariffs. WRRA and 
Stericycle believe that both sets of issues are properly presented in this 
proceeding and may be most properly and 

effectively resolved by declaratory order.  WRRA Responsive Brief at 2 ("WRRA 
believes that the present action is an appropriate forum for resolution of 
these issues and would be quicker and more effective than a rule-making 
procedure").
 BFI suggests that existing rate agreements with non-profit hospitals, although 
unlawful under RCW 81.28.080, should be "grandfathered" and allowed to remain 
in effect for up to three years.  BFI's proposal is entirely without legal 
support.  The law is clear that contracts made in violation of RCW 81.28.080 
are void and unenforceable.  If the Commission concludes (as BFI agrees) that 
the exception for "charitable" transportation is inapplicable to regular 
medical waste collection services provided to non-profit hospitals, agreements 
to charge non-tariff rates are void and unenforceable.  The Commission has no 
power to "grandfather" such agreements.  Nor does the Commission have the power 
to authorize the rate discrimination which would occur between hospitals who 
are required to pay tariff rates and hospitals permitted to continue to pay 
below-tariff rates for up to three years.
 Clearly, all of the service agreements which have been entered into between 
carriers and hospitals have been entered into subject to existing law, 
represented by RCW 81.28.080 and 

WAC 480-70-440, and to the regulatory authority of the Commission.  BFI's 
suggestion that illegal contracts cannot be 
set aside without violating the Contract Clause of the state and federal 
constitutions is clearly wrong.  The Commission is free to issue a declaratory 
order applying RCW 81.28.080 to the facts before it.
 There are no facts before the Commission to suggest that requiring non-profit 
hospitals to pay tariff rates for medical waste collection services will have 
any significant adverse effect on the hospitals.  The Washington State Hospital 
Association (WSHA) has participated in these proceedings from the beginning, 
signed the Stipulated Facts and filed a brief with the Commission.  At no time 
has WSHA argued that requiring non-profit hospitals to pay tariff rates -- even 
existing tariff rates --would have significant economic impacts on the 
hospitals.  To the contrary, WSHA has stated that its principal objective in 
this proceeding is not to argue for the lowest rates possible in the short 
term, but "to assure that there continue to be financially stable, reliable 
biomedical waste disposal carriers committed to providing long-term disposal of 
biomedical waste which is available to all members of WSHA throughout the 
state."  WSHA Memorandum at 2.  In any event, since a requirement that the 
non-profit hospitals pay tariff rates does not require that the carriers retain 
existing rates, the carriers would be 

free to propose reductions in their tariff rates in proper circumstances.  
There is nothing before the Commission to suggest, and nothing in the nature of 
the tariff requirement that requires, that non-profit hospitals would suffer 
any significant economic disadvantage as a result of a ruling that the carriers 
must charge and collect their tariff rates from non-profit hospitals.  Thus, 
there is no "hardship" which should cause the Commission to consider 
"grandfathering" existing rate agreements or devising some other "transition" 
mechanism. At most, the Commission could consider delaying the effective date 
of its order for two or three months to give the carriers time to consider 
whether to propose modifications to their tariffs. 
 Since all parties agree that RCW 81.28.080 requires the carriers to charge and 
collect tariff rates for regular medical waste collection services provided to 
non-profit hospitals, the Commission should issue a declaratory ruling to this 
effect. There is no rationale for permitting ongoing violations of the law. 
3. The Nature of the Present Proceeding Precludes Expansion to Consider Issues 
Not Raised in the Staff Petition. 
 This is an adjudicative proceeding initiated by the Commission Staff under the 
declaratory order provision of the Washington Administrative Procedure Act, RCW 
34.05.240(1).  The Commission's authority is limited by the nature of this 
proceeding and by the petition which initiated it.  The scope of the issues 
presented is confined by the issues raised in the 

Staff's Petition for Declaratory Order.  Since no hearing has been held, the 
facts cognizable by the Commission are only those recited in the Stipulated 
Facts, filed herein, and those limited 
facts which may be officially noticed.  The remedies available to the 
Commission are only those authorized by RCW 34.05.240(1).
 The vague and unsubstantiated charges raised by BFI and WRRA with respect to 
the Marketing Agreement between Washington Hospital Services and Stericycle are 
not before the Commission in this adjudicative proceeding.  No facts are before 
the Commission concerning this agreement or its alleged impacts on the 
marketplace.  If BFI or WRRA wish to obtain a Commission ruling on the 
propriety of that agreement (of which both have had copies for several years), 
they should initiate a proceeding before the Commission by Complaint.
4. Conclusion and Request for Oral Argument.
 For the reasons stated above and in its opening memorandum, Stericycle 
respectfully requests that the Commission issue a declaratory order making a 
final determination on both the "service agreement/termination of service" 
issues and the "free and reduced rate" issues, holding that provisions of 
service agreements relating to termination of service must conform to WAC 
480-70-710, holding that liquidated damages provisions of service agreements 
are subject to RCW 81.28.080 and holding that carriers are required by RCW 
81.28.080 to charge and collect published tariff rates for regular medical 
waste collection services provided to non-profit hospitals.
 Stericycle respectfully requests that oral argument be allowed on this matter.
 DATED this 23rd day of September, 1997.
      Respectfully submitted,
      GARVEY, SCHUBERT & BARER




      By___________________________
         Stephen B. Johnson

      Attorneys for Stericycle of         Washington, Inc.