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Cityburgers: Controlling Local Government Profit-Making Activities

A city establishes a garbage collection company in order to generate revenue, but destroys the business of an existing private garbage collection company in the process by supplanting the private company’s customer base. As a general proposition, the private company has no right to complain because current legal doctrine allows local governments to engage in such entrepreneurial activities as long as some conceivable "public purpose" is present. And, of course, providing garbage collection is undoubtedly a "public purpose." This article suggests that such exercise of governmental power through the operation of economic enterprises should be evaluated under a more robust form of judicial review according to the following principles: (1) Protecting private enterprise from governmental economic enterprise activities, (2) protecting the public purse from speculative and inefficient governmental operation of economic enterprises, and (3) preventing official self-aggrandizement in the course of establishing or operating government economic enterprises. The article discusses the crucial role of judicial review in implementing these policies and addresses the concerns of maintaining a proper division between judicial decisionmaking, legislative decisionmaking and popular participation in governmental decisionmaking.