"A government big enough to give you everything you want, is big enough to take away everything you have"
Thomas Jefferson

Tuesday, March 25, 2008

Monopolizing Trash: Flow Control


The Supreme Court ruled United Haulers Association, Inc. v. Oneida-Herkimer Solid Waste Management Authority, allowing local governments to control the flow of waste to publicly owned facilities. Their ruling allows authorities such as the Development Authority of the North Country, DANC, to monopolize the use of the solid waste facility in Rodman by local governments passing flow control legislation directing haulers to dispose of all waste from within the region at Rodman.

Is it wise for governments to control the flow of waste even if they have that option?

Critics may say there are no incentives to run a facility with any efficiency or cost effectiveness driving up the cost of waste disposal, which could ultimately be considered a tax or fee increase given the legislation is passed by local governments. In addition, the current cost of fuel makes the transportation cost for haulers a major concern, and a facility such as DANC operating at a reasonable level of cost effectiveness can more than compete against waste facilities further away from the region.

Proponents of flow control legislation will make the case that facilities' majority of cost are fixed and that a certain amount of waste is required to cover that cost. In the case of Rodman Solid Waste Facility, they have debt to cover, which if not covered is passed through to county governments to pay. An astute hauler, such as Casella or Waste Management, recognizes and leverages their position during negotiations with an Authority for a favorable tipping fee. The proponents will say fixing the amount of waste entering a facility stabilizes their revenue and allows them to operate more efficiently and maintain a stable price for the public. The proponents will also say this is a way to improve recycling. The case was made that flow control benefited public facilities and all haulers are treated equal.

Both sides of the discussion have merit, although flow control displaces competition with regulation thereby creating monopoly control of waste disposal. Through the creation of DANC and the publicly owned Solid Waste Facility local governments are in the position to make policy on solid waste, the Supreme Court handed them one more tool, if they choose to implement flow control.

1 comment:

Kentsboss said...

There has been a lot of talk about flow control recently being made available but in reality, it has been a tool that the north country consortium of counties could have used for some time. In the Clarkstown ruling that initially appeard to ban flow control as a restraint of trade, the municipality attempted to restrict the flow of trash from within its boundaries to a privately owned landfill. The court said that restrained trade by preventing private haulers from taking trash to a different private landfill than the one in Clarkstown. However, the ruling didn't address municipal or quasi-municipal landfills, such as the one in Rodman.
So if this tool has been available, why is the issue coming up now? It's because DANC took a lot of heat for agreeing to the sweetheart contract with Casella, a contract due to expire. If all three counties agree to a flow control ordinance, Casella will either haul to Rodman or get out of the three counties -- which DANC is betting it is not willing to do.
Flow control for the counties signed onto the DANC agreement makes both fiscal and political sense. I predict you'll see laws enacted by all three counties in time for DANC to do some hardball negotiating.

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