Contractor-Billed Waste Fees Exempt from Voter Approval:
In-Depth Commentary on Johnson v. City of Omaha, 319 Neb. 402 (2025)

1. Introduction

In Johnson v. City of Omaha, the Nebraska Supreme Court resolved two novel questions at the intersection of competitive-bidding law, taxpayer standing, and Nebraska’s Integrated Solid Waste Management Act (ISWMA):

1. Whether a post-opening “clarification” of a bid concerning unit pricing for yard-waste stickers constituted a forbidden material variance; and
2. Whether the voter-approval requirement set out in Neb. Rev. Stat. § 13-2020(4) applies when a contractor—rather than the city—charges residents for optional solid-waste services.

The case arose after Omaha awarded a 10-year, $227-million solid-waste collection contract to FCC Environmental Services Nebraska, LLC (FCC-Nebraska), a subsidiary of Spanish parent FCC. Rodney Johnson, an Omaha taxpayer, alleged that the City’s bidding process was tainted and that the yard-waste sticker fee of $1.98—set and collected by FCC—was an illegal charge because Omaha (a city of the metropolitan class) had not obtained voter approval. The district court granted summary judgment for the City and FCC; the Supreme Court affirmed, simultaneously clarifying Nebraska law on standing, bidding discretion, and the scope of § 13-2020(4).

2. Summary of the Judgment

• Standing: Johnson had taxpayer standing because he paid municipal taxes and had made a demand on the City which was refused.
• Bid clarification: Requesting FCC to express its sticker price in 30-gallon units (instead of its original 606-gallon unit) did not materially alter the bid. No evidence of favoritism or bad faith appeared.
• Voter approval: The voter-approval clause in § 13-2020(4) applies only when the city establishes and collects the rates. Where, as here, a contractor charges residents directly under § 13-2020(5), no popular vote is required.
• Procedural ruling: Johnson’s late motion to add a new claim against FCC-Nebraska (as opposed to FCC-Spain) was properly denied for undue delay.

3. Analysis

3.1 Precedents Cited and Their Influence

• Fairbanks, Morse & Co. v. City of North Bend, 68 Neb. 560 (1903) — The Court reused the century-old principle that bids cannot be substantively changed after opening; only “mere irregularities in form” may be corrected. The case provided the yardstick for deciding whether FCC’s clarification was a material variance.
• Day v. City of Beatrice, 169 Neb. 858 (1960) and Best v. City of Omaha, 138 Neb. 325 (1940) — Both reinforce judicial deference to municipal discretion absent bad faith, favoritism, or fraud. The Court borrowed their language to dismiss Johnson’s favoritism claim.
• Rath v. City of Sutton, 267 Neb. 265 (2004) — Quoted for the proposition that competitive-bidding statutes exist to protect taxpayers and ensure the best price, but courts avoid second-guessing municipal judgments unless arbitrary.
• Standing line of cases: Thompson v. Heineman, 289 Neb. 798 (2015) and Chambers v. Lautenbaugh, 263 Neb. 920 (2002) — Provided the framework for taxpayer standing, requiring both an alleged illegal expenditure and a pre-suit demand.

3.2 Key Legal Reasoning

3.2.1 Bid Clarification vs. Material Variance

The City erred by omitting a standard unit size in Bid Package D. Three bidders priced stickers per 30-gallon bag; FCC priced $40 per 606-gallon unit. Once this disparity became apparent, the City asked FCC to restate its sticker price per 30-gallon bag—simple arithmetic ($40 ÷ 606 gal × 30 gal = $1.98). The Court labelled the correction “mere irregularity”:

Converting the sticker price to a standardized 30-gallon unit did not alter the total amount of FCC’s bid, and it enabled the City to evaluate all four bids on the same basis.

Because the price per gallon remained 6.6¢ before and after, FCC obtained no advantage; therefore, no material variance occurred, and competitive integrity remained intact.

3.2.2 Bad Faith & Favoritism Allegation

Bad faith requires evidence that officials acted with ill will, fraud, or collusion. Johnson offered only speculation. Citing Rath, the Court reiterated that “courts should normally ignore mere assertions of favoritism and waste, absent evidence to the contrary.”

3.2.3 Scope of the Voter-Approval Requirement

Section 13-2020 contains two charging mechanisms:

1. (4) Government-imposed rates “paid to it”—subject to a metropolitan-class vote.
2. (5) Contractor-imposed rates—authorized by contract; no vote language appears.

Applying classic canons—in pari materia, expressio unius, and textualism—the Court reasoned:

• If the Legislature intended contractor charges also to require an election, it would have inserted the same proviso in subsection (5).
• Because the stickers are sold and revenue collected exclusively by FCC, the charge is not “paid to” the City; consequently, subsection (4) is inapplicable.

This interpretation gives effect to every word without judicially rewriting the statute.

3.3 Impact of the Decision

• Clarifies ISWMA’s revenue provisions: Nebraska municipalities, especially Omaha, now know that optional contractor-levied fees (carts, stickers, special pick-ups) do not trigger the electoral hurdle of § 13-2020(4). Cities may structure “à-la-carte” solid-waste services contractually, reducing fiscal pressure on general funds.
• Guidance on post-opening bid corrections: The Court formally adopts the “material variance” test as the metric for when a post-bid change is impermissible, harmonising more than a century of case law and local-government practice.
• Taxpayer litigation parameters: By accepting Johnson’s standing yet rejecting his claims on the merits, the Court underscored that taxpayers can cleanse public contracting through the courts, but evidence—rather than suspicion—is required.
• Administrative discretion reaffirmed: Municipal bodies retain broad latitude during bid review, provided changes do not confer substantive competitive advantage.

4. Complex Concepts Simplified

• City of the Metropolitan Class: Under Neb. Rev. Stat. § 14-101, only a city with 400,000+ inhabitants qualifies—presently Omaha.
• Material Variance: A change in a bid after opening that affects price, quality, or quantity and grants the bidder an advantage over competitors. Purely arithmetical or formatting corrections are not material.
• Facial vs. Factual Standing Challenge: A facial challenge asks whether allegations, taken as true, establish standing; a factual challenge contests the underlying facts and may involve evidence. Here, evidence showed Johnson paid Omaha taxes and made the requisite pre-suit demand, satisfying taxpayer standing.
• § 13-2020(4) vs. § 13-2020(5):
  • (4) governs government-run systems and charges “paid to” the city; voter approval is mandatory for Omaha.
  • (5) governs contractor-run systems where contractors bill customers directly; voter approval not required.

5. Conclusion

Johnson v. City of Omaha cements two pivotal rules in Nebraska municipal law:

1. Post-opening bid clarifications are permissible so long as they correct non-substantive irregularities and do not advantage the bidder.
2. The electorate’s approval is compelled under § 13-2020(4) only when a metropolitan-class city itself levies and collects solid-waste rates; contractor-billed charges authorized under § 13-2020(5) lie outside that requirement.

Beyond settling the Omaha waste-collection controversy, the judgment supplies a practical roadmap for Nebraska municipalities designing service contracts and for taxpayers scrutinising them. By harmonising century-old bidding doctrines with modern privatization practices, the Court balanced governmental flexibility with public-interest safeguards—an equilibrium likely to influence procurement and solid-waste policy for years to come.