                                                                                                               F_ ILE- D
                                                                                                        COU T OF APPEALS
                                                                                                             DWIS" M 11

                                                                                                       2015 SEP - 9   A, 1 li: 55
      IN THE COURT OF APPEALS OF THE STATE OF WASHIN

                                                DIVISION II

 STERICYCLE OF WASHINGTON, INC.,                                                  No. 46100 -5 -II


                                     Appellant,


          PM



 WASHINGTON UTILITIES AND                                                    PUBLISHED OPINION
 TRANSPORTATION COMMISSION and
 WASTE MANAGEMENT OF WASHINGTON,
 INC.,


                                     Respondent.




         SUTTON, J. —      Stericycle of Washington Inc. appeals the superior court' s order affirming

the   Washington       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   services.    Stericycle   argues   that the Commission ( 1)        exceeded its


statutory authority, ( 2)   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.
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

Commission that "           public convenience and               necessity" (         PCN) require the company' s operations.

RCW 81. 77. 040.            The Commission began issuing PCN certificates of authority to companies

providing specialized services for biomedical waste collection in the 1980s following concerns

about   the     spread of    disease      posed   by disposing       of   this   waste    like   regular garbage.'   AR at 595 ( In


re   Am. Envtl. Mgmt.            Corp.,   Order M.V. G. No. 1452,                at   4 ( Wash. Utils. &   Transp. Comm' n Nov.

30, 1990)); AR         at   632 ( In     re   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     was useful      in this      specialized service.   AR at 632 ( Ryder


Distrib. Res., Order M.V.G. No. 1596,                     at   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   at   632 ( Ryder Distrib. Res., Order M.V.G. No. 1596,               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),     cultures and stocks, human blood and blood products,
pathological waste ( biopsies,                tissues,    and other anatomical waste),             and sharps waste. WAC 480-
70- 041.



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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]     mIn
                                                                   omission."        RCW 81. 77. 040. 2       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."            AR at 668 (In re Sureway

Med. Servs., Inc., Order M.V. G. No. 1663,                at   10 ( Wash. Utils. &   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.



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No. 46100 -5 -II




Rather, it   would also consider " need -related             sufficiency       of service considerations - -   whether the



existing   service   reasonably    serves     the needs      of   the    specialized market."      AR at 668- 69 ( Sureway

Med. Servs., Order M.V. G. No. 1663,                  at   10- 11).      Thus, it   would give "   considerable weight to



testimony      of [biomedical] waste generators             regarding their       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          the   service."      AR at 744 ( In re Pet' n of Comm' n Stafffor a Decl.

Ruling,    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   has   provided         statewide       biomedical         waste   collection    service   since   the


Commission first        granted   it   such   authority in 1995.             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



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No. 46100 -5 -II




collect biomedical waste in territory that encompasses 80 percent of the total amount of biomedical

waste .produced         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


objected.         These companies provide biomedical waste collection services within Waste


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          with   Stericycle'   s   scheduling, pricing,   and customer service, (   4) a


desire to       exert   leverage   over   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.




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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 market-

place 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 .that the public

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


bio -hazardous      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.


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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   collection.    RCW 81. 77.040 provides that the Commission may issue. a PCN
certificate   to   a waste collection     company      after   it   analyzes   the   following five factors: (     1) the present
service     in the   area   to be served   and   the   cost   for that   service, (      2) the estimated cost of facilities to
be   used   for   collection and   disposal, ( 3)
                                      a statement of the company' s assets that will be expended
on   the   collection and      disposal
                                     4) the company' s prior experience in the field, and ( 5) the
                                          plant, (

sentiment in the community to be served as to the necessity of the proposed service.



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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 "          company or companies serving the territory will not provide service to the

satisfaction     of    the     commission."             RCW. 81. 77. 040.       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

 2015).      When a statute directs that the agency shall exercise its discretion, we limit our function

to determining whether that agency exercised its discretion within the law and we do not overrule

the agency' s        discretion.        RCW 34. 05. 574( 1).       The burden of demonstrating invalidity is on the

party     asserting      it.          Cornelius    v.    Dep' t   of   Ecology,    182   Wn.2d    574,        585,   344   P. 3d


199 ( 2015).


            RCW 34. 05. 570( 3)              provides the only circumstances in which we may overturn an

adjudicative         agency proceeding.            Stericycle' s challenges fall under four of these provisions:


 1)   the    final   order     is "    outside   the [ Commission'      s]   statutory authority," ( 2) the Commission


erroneously interpreted the law, ( 3)                   the final order is unsupported by substantial evidence, and

 4) the final        order   is arbitrary      and capricious.     RCW 34. 05. 570( 3)( b), ( d), (   e), (   i). Stericycle' s


challenges fail.




  Chapter 34. 05 RCW.



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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   satisfaction of the    [ C]   ommission,"     under RCW 81. 77. 040 when it granted statewide


biomedical      waste service      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)   " service" under RCW 81. 77. 040 must be interpreted as a directive to the


Commission to           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


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No. 46100 -5 - II




Commission decides that existing .service providers are not operating to the Commission' s

satisfaction.         No language in RCW 81. 77. 040 mandates a monopoly model on solid waste

collection      service.       Instead, it provides that the Commission may grant an application for

competing authority if existing                                                                                 serving the
                                                           waste   collection "             or   companies"
                                                   solid                          company


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

 satisfactory        service,"      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      of    the    customers       themselves.     RCW 81. 77. 040 (     emphasis   added);   e. g. Br. of

Appellant      at   20 ("   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      to the   plain   language        of   RCW 81. 77. 040. The Commission and Waste Management focus


on    the   phrase " service        to the   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.




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No. 46100 -5 -II



B. THE COMMISSION PROPERLY EXERCISED ITS DISCRETION UNDER RCW 81. 77. 040

           Stericycle   relies   heavily      on   Superior Refuse Removal, Inc.         v.   Washington Utilities &


Transportation Commission, 81 Wn.                  App.    43, 913 P. 2d 818 ( 1996), the only case to examine the


meaning      of " service   to the     satisfaction of     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   authority.   Eight biomedical waste generators




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No. 46100 -5 -II




testified that they were unhappy with their limited market choices for disposing of their specialized

waste.      Each of them testified that they wanted or needed a statewide market competitor to

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.          App. 809,   813, 309 P. 3d 761 ( 2013).          Substantial evidence is evidence that is


sufficient    to   persuade   a   fair- minded    person   of   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



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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

competitive      market          outweighed " unsubstantiated          claims"    of economic harm to the existing

companies,      including        Stericycle. CP   at   43.   Importantly, this finding of fact is a verity on appeal

because Stericycle does            not assign error    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'            s competition.     Although Stericycle presented counter evidence to Norton' s


testimony,      we   do    not reweigh evidence         or make our own          credibility determinations.       Thomas, .


176 Wn.    App.      at   813.    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
          and   early 1990' Due to a lack of experience with the impacts of allowing more
                                   s.

          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



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           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

           TG -970532, Decl. Order at 11 ( Wash. Utils. & Transp. Comm' n Aug. 14, 1998).]
           Stericycle currently competes with another certificated company to provide such
           service  throughout the vast majority of the       state— including with Waste
           Management for the last two years in territory that includes 80 percent of the
           generators      in Washington— without              any adverse impact on the companies'
           economic        viability     or   ability   to   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,


                      We   view   this     that an applicant can demonstrate that existing
                                         conclusion[,

           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
           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
           collection industry, regulation should ensure that consumers reap the benefits of
           multiple service providers by encouraging an effectively competitive marketplace.




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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

Stericycle.        After multiple Commission orders since 1990 that reference the uniqueness of the


biomedical                                                                                                and   the
                   waste     industry,   as   compared    to    neighborhood   garbage    collection,




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   at   667 (   Sureway   Med. Servs., Order M.V. G. No. 1663,     at   10); AR at 744 ( In re Pet' n


of Comm'       n    Staff for   a   Decl.   Ruling,   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"




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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            to the attending facts            or circumstances."        Northwest Sportfishing Indus.

Ass' n   v.   Dep' t     of Ecology, 172 Wn.             App.    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       consideration even            if we   might   believe it   was erroneous.   Ass'   n   of Wash. Spirits & Wine


Distrib.      v.   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     agency decisions.     City of Federal Way v. Koeing,

167 Wn.2d 341, 343, 217 P. 3d 1172 ( 2009);                         Kittitas County v. K Wash. Growth Mgmt. Hearings

Bd. 172 Wn.2d 144, 173                   n. 9,   256 P. 3d 1193 ( 2011).        Agencies should not treat similar situations


differently         and    should      strive      for   equal    treatment.      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
make a specific   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

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.


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     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             began    over    two decades ago.         In 1990, the Commission first recognized


     the   need   for biomedical         waste collection services.            AR at 574- 75 ( Sure -Way Incineration, Order

     M.V.G. No. 1451,            at   16- 17).   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     proceedings"         allowing biomedical service companies to compete in a given

     territory. AR       at   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        Commission'        s    subsequent         decisions     since Sure -Way Incineration contradict

     Stericyle'   s    argument.         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             at    667 ( Sureway Med. Servs., Order M.V. G. No. 1663,                      at   9).   The Commission


     explained        that it   would not        limit its   consideration      to "   service   failures" of the sort common to


     neighborhood garbage collection.                     AR at 668 ( Sureway Med. Servs., Order M.V.G. No. 1663, at

     10).   The Commission also explained that in granting PCN authority to a biomedical waste service


11




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company it     would   broaden its       consideration       to include " need -related sufficiency of service


considerations - -   whether the existing service reasonably serves the needs of the specialized

market."    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,   at    12).   The Commission noted that competition can be detrimental to business

but that   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




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No. 46100 -5 -II




Br. of Appellant, App. A, Tab 13 ( In re Pet' n of Comm' n Stafffor a Decl. Ruling, Docket No.
                                                                                                             7
TG -970532, Initial Order,          at   3   n.   l ( Wash. Utils. &    Transp.   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   waste      collection         industry " promotes higher quality of service in terms of

protecting the    public   health        and      safety."   AR at 767- 68 ( Stericycle of Wash., Inc. v. Waste Mgmt.

of Wash., Inc., Docket No. TG -110553, Order 2,                       at   14- 15 ( Wash. Utils. &   Transp. Comm' n July

13, 2011)). "      Commission policy has historically encouraged competition in the provision of

biomedical      waste services."         AR at 769 (Stericycle of Wash., Docket No. TG -110553, Order 2, at

16).       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   relies    on     the      Commission' s      statement    in 1993 that " mere preference for


competition"      does    not     demonstrate          a need   for   an   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).

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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     not   demonstrate   a   great need      for competing PCN authority.      AR at 699


 Sureway   Med. Serv., Order M.V. G. No. 1674,              at    5).   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    companies,   although     providing " satisfactory"      physical   collection

         service,     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
            mere preference      for competition[] does not demonstrate a need for an additional
         carrier.


AR at 698- 99 ( Sureway Med. Serv., Order M.V.G. No. 1674, at 4- 5).

                                                       21
No. 46100 -5 -II



alternative.      The Commission acknowledged Sureway Medical Services' s statement that " mere

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.




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