United States Solid Waste and
Environmental Protection Emergency Response EPA530-S-95-008
Agency (5305) March 1995
&EPA Report to Congress on
Flow Control and
Municipal Solid Waste
Executive Summary
Printed on Recycled Paper
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EXECUTIVE SUMMARY
WHAT DID CONGRESS ASK EPA TO DO?
In September 1992, Congress directed the Environmental Protection Agency (EPA) to develop
and submn a Report to Congress on flow controls as a means of municipal solid waste (MSW)
management. Congress asked EPA to:
present a comparative review of States with and without flow control authority;
identify the impact of flow control ordinances on protection of human health
and the environment; and
identify the impact of flow control on the development of State and local
) waste management capacity and on the achievement of State and local goals
for source reduction, reuse and recycling.
5 WHAT ARE FLOW CONTROLS?
Row controls are legal authorities used by State and local governments to designate where
MSW must be taken for processing, treatment or disposal. This waste management approach requires
0 waste to be delivered to specific facilities such as waste-to-energy (WTE) facilities, materials recovery
facilities (MRFs), composting facilities, transfer stations and/or landfills. The facilities can be either
,.
publicly or privately owned. One of the direct effects of flow control is that designated facilities are
assured of receiving a guaranteed amount of MSW and/or recyclable materials. If me designated
facilities charge a "tipping fee" for receipt of the MSW/recyctabtes, flow control assures a source of
revenue to meet their capital and operating costs.
WHAT FACTORS ENCOURAGE USE OF 'FLOW CONTROLS?
Use of flow controls took hold in the late 1970s. State and local governments began using
flow controls primarily to support the development of new MSW capacity, particularly if it required
large capital investment (e.g.. financing of WTE facilities). Flow controls assisted State and local
governments in financing these facilities by ensuring long-term receipt of enough waste to generate
sufficient revenues to pay facility debt service and other costs.
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Page ES-2 EXECLTIVE sLMMARf
Also influencing use of flow controls were State goals and mandates for increased receding or
diversion of specific wastes (e.g., yard trimmings) from landfills. Row control was one mechanism
used hy local governments to generate needed revenues to pay for programs and to direct waste to
recycling/composting facilities. This enabled them to respond to State recycling goals and mandates.
A:, local governments expanded waste management services, flow controls were utilized as a
mechanism to ensure funding for various components of their solid waste management systems such as
source reduction programs, household hazardous waste collection, and public education. These
services typically do not lend themselves to collection of revenues as do facility-based components
(e.g.. tipping fees at transfer stations, WTE facilities and landfills). The most frequent rationale for
adopting flow control is to assure the financial viability of waste management facilities by providing a
reliable, long-term supply of waste. This assurance can be instrumental in securing capital to finance
the construction of a facility.
Flow contra also may facilitate solid waste planning and management State and local
governments can plan for the appropriate type, number, and size of facilities to handle the long-term
generation of waste within a specific area.
HOW DID EPA APPROACH THE CONGRESSIONAL REQUEST?
In an effort to analyze the issues posed by Congress, EPA
held public meetings to obtain information from interested stakeholders;
examined States' solid waste management laws to compare flow control
authorities across the United States; and
» performed a market analysis of the four primary MSW management segments
(i.e., composting, recycling, combustion and landfills) to assess the role of
flow control in ensuring MSW management capacity and in attaining goals for
source reduction, reuse and recycling.
The approach provided EPA with a national view of the need for flow controls. The Agency
recognizes that local circumstances may differ substantially from the national perspective. Each State
and local government needs to consider local conditions and alternatives when determining the need
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EXECLTIVE slMMARi
for flow control. If a State or local government has relied on flow control to achieve certain ends.
sudden elimination of flow control may disrupt ongoing solid waste practices.
WHAT ARE THE FINDINGS?
Congressional Question: Present a comparative review of States with and without flow
control authority.
Finding: Thirty-five States, the District of Columbia, and the Virgin Islands authorize flow
control directly; four additional States authorize flow control indirectly through
mechanisms such as local solid waste management plans and home rule
authority; eleven States have no flow control authority.
Discussion: No primary source of information was available which identified States with and
without flow control authority or those local governments implementing flow control within the States.
Developing a complete picture of the nationwide scope of flow control laws would he an extremely
complex task due to the differences among State laws, the dynamics of the solid waste industry, and
the variability of infrastructures among local governments across the nation. EPA determined that a
comparative review of State flow control authorities could be presented by (1) reviewing State statutes
and regulations, and (2) developing case studies to illustrate how local MSW programs are
implemented with and without flow controls.
f
As shown in Exhibit ES-1, 35 Stasis, the District of Columbia, and the Virgin Islands
explicitly authorize flow control. However, not altjucisdctioas exercise this authority. For example,
Illinois has authority to implement flow control, but there is no evidence that local governments within
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the State currently use it Also, a number of States^ fmpose administrative requirements which must he
met before local governments can implement Sew control, such/ a» demonstrating a need for flow
control, holding public hearings, and/or first attempting to negotiate contracts with the private sector.
Of the 35 States wj£& atfftbrize flow control, 23 (and the District of Columbia) limit some or all
vU'^vi
recvclaNe materialMt»nv coverage under flow control.
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Four States authorize flow control indirectly through mechanisms such as home rule (MA,
MD) or the State/local solid waste management planning, process (MT. IX). In a home rule State,
municipalities may exercise power over local issues to the extent not prohibited or regulated by the
State. Using home rule authority, municipalities may establish flow controls over their solid waste. In
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Page ES-4
EXECITIVE SIMMARY
EXHIBIT ES-1
SUMMARY OF STATE FLO1" CONTROL AUTHORITY
Michigan and Texas, municipal solid waste planning documents determine capacity needs and can
authorize flow control as part of the plans' requirements.
Eleven States (AK. AZ. CA, ID, IN. KY, KS, NV, MM. SC, UT> have no flow control
authority. " . . "'
Congressional Question: IdtiO^y Ou impact of flow control ordbuutccs on protection of
human health and the environment
Finding: Protection of human health and tht environment is directly related to the
implementation and enforcement of federal. State, and local environmental
regulations. Regardless of whether State or local governments administer flow
control programs, States are required to implement and enforce federally approved
regulations that fully protect human health and the environment. Accordingly,
there are no empirical data showing that flow control provides more or less
protection.
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E\ECLTI\E !>LM.\LAR\ Puue ES-5
Discussion. In the United States, approximately 80 percent of MSW is managed in landfills
and combustors. Landfills and municipal waste combustors are controlled by State and federal
regulations which are implemented through facility permitting and compliance assurance programs.
These programs are designed for the express purpose of protecting human health and the environment
and require the ^ame level of control whether or not the waste is subject to flow controls.
In recent years. States have begun regulating composting and recycling facilities to protect
human health and the environment, without regard to whether the materials are subject to flow
controls. Further, our market analysis shows that only a small percentage of recovered materials
managed by the composting and recycling segments is affected by flow control ordinances. Also,
many States that authorize flow control explicitly exclude certain recyelables from flow control
restrictions.
Congressional Question: Identify the impact of flow control on the development of State
and local waste management capacity and on the achievement of
State and local goals for source reduction, reuse, and recycling.
Finding: Flow controls play a limited role in the sotid waste market as a whole. Flow
controls are not typically utilized by landfills or composting facilities. Less than
3 percent of the recycling market is subject m flow controls; however,
approximately 19 percent of the materials handled by easting MRF-dased
recycling programs are supported by flow controls. Flow controls play the largest
role in the waste-to-energy market where at least 58 percent of the throughput is
supported by flow controls.
Although flow controls have provided an administratively efficient mechanism for
local governments to plan for and June* their soUd: waste management systems,
there are ahematives. Implementation of those aMvnatives by communities
currently rttying on flow controls could be disruptive and take time.
Accordingly, there are no data^howing mat flow controls are essential either for
the development of new sotid waste capacity or for the long term achievement of
Slate and local goals for source reduction, reuse and recycling.
Discussion: EPA conducted a market analysis to determine whether market intervention in the
form of flow controls is needed to ensure adequate capacity or to achieve State and local recycling
goals. Our analysis addressed discrete market segments (i.e.. composting, recycling, combustion, and
landfills) that both work together and compete to perform the complete job of solid waste management
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Page ES-6 EXECLTIVE S
in communities. The analysis uses a number of indicators to assess market conditions and the
prevalence of flow controls for these segments. The indicators include growth trends, ownership
patterns, cost competitiveness, and capital requirements. These indicators are rough measures that
enable an assessment of the role of flow controls in ensuring MSW management capacity and in
attaining State and local goals. However, they cannot capture the realities of every specific MSW
market. Due to data limitations, the report does not analyze price-cost relationships in jurisdictions
with and without flow control. Appendix I-A presents a summary of public comments, some of which
discuss the economic impacts of flow control.
Following is a summary of the analysis of each of the four market segments, as well as a
discussion of integrated solid waste management (ISWM) systems.
COMPOSTING
The two subsegments reviewed included yard trimmings composting and mixed-waste
composting. Yard trimmings composting accounts for 96 percent of this segment From a national
perspective, flow controls generally have not been an important factor in the compost segment.
However, in some communities, higher tipping fees at flow control facilities have provided a
funding mechanism to subsidize compost facilities.
Market Growth
The composting market segment grew from 0.5 million tons of recovered material in 1988 to
over 9.2 million tons in 1992. In addition, the number of yard trimmings composting facilities
increased by 361 percent between 1989 and 1993, going from 651 to 3,000 facilities. Enactment by
27 States (and the District of Columbia) of bans on landfllling of yard trimmings has fostered the
rapid expansion of the composting market segment
The trend is for continued growth in the number of yard trimmings composting facilities; such
growth in the mixed waste composting sector is not as likely. Based on the following factors, the
composting market segment should be capable of ensuring additional capacity independent of flow
control:
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EXECIT1VE
* recent growth:
an expanding number of States with bans on landfilling of yard trimmings;
» an ample supply of compostable materials and expanding end-markets
especially in the agricultural sector, and
» the increasing number of governmental agencies which are establishing
procurement policies that favor the purchase of compost for public spaces and
parks.
Impact of Flow Controls
Although flow controls are used to guarantee waste for some of the 21 mixed waste
composting facilities, EPA found no evidence that they are used widely to guarantee waste flows for
yard trimmings composting facilities. However, local jurisdictions will sometimes subsidize
composting facilities with pan of the revenue received from the higher tipping fees at flow control
facilities.
RECYCLING
The recycling market subsegments reviewed included materials recovery facilities (MRFs) and
other recycling operations (i.e., independent recovered paper and paperboard dealers, industry-
sponsored buy-back programs and drop-off centers, and mixed waste processing facilities). For the
recycling segment, flow control has been an important firetor for MRFs, particularly MRFs that
require substantial capital investments. Thirty-two (32) percent of waste handled by "high
technology" MRFs is supported by flow controls. An additional SO percent of high technology
MRFs have waste guaranteed through contractual arrangements, some of which may be
supported by flow control.
Market Growth.
Between 1985 and 1992, there was a 150 percent increase in the recycling market going from
16 million tons of recycled materials in 1985 Co over 40 million tons in 1992. The growth in the
recycling market is demonstrated by the following factors:
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Page Eb-3 EXECUTIVE sLMMARV
Curbside collection programs grew from 1,000 programs in 1988 to over 6.600
programs in 1993 (568 percent increase);
* Recycling or waste reduction goals have been established in 43 States and the
District of Columbia: some of these States also have banned the landfilling of
recoverable items such as batteries and tires;
* The number of MRFs increased from 13 facilities in 1985 to 198 in 1992, with
a 100 percent increase between 1990 and 1992.
A continuing expansion of end-market facilities that use recycled materials (e.g., paper mill de-
inking facilities) indicates that the recycling segment will continue to account for an increasing share
of the MSW management market.
Impact of Flow Controls
EPA estimates that only 2.7 percent of the 40 million tons of recyclable materials is subject to
flow controls. The analysis indicates that flow controls are not used for paper packers and buy-
back/drop-off programs, which represent 85 percent of the recycling market. Conversely, flow
controls do play a role in the MRF segment of the recycling market In 1992, 13 percent of MRFs
(26 facilities), with 19 percent (1.1 million tons) of the throughput, received waste guaranteed by flow
control. In addition to MRFs supported by flow control, a significant amount of MRF throughput is
guaranteed by contractual arrangement: 41 percent of MRF (82 facilities), with 44 percent (2.5 million
tons) of total throughput. Local government may use flow control to ensure that enough waste is
delivered to meet the terms of the contract
Flow controls have been more important for high-technology MRFs than for low-technology
MRFs. Flow controls direct 32 percent of the throughput at high technology MRFs (17 facilities),
compared to only seven percent of throughput in low-technology MRFs (9 facilities). Another 24
MRFs were planned^ be operational after 1992: these will be predominately (i.e., 17 out of 24) high-
technology MRFs, Six of me nigh tech MRFs, with 18 percent of the throughput, are expected to be
supported by flow controls. For the seven low-technology MRFs that are planned to be operational
after 1992, only one is expected to be supported by flow controls. The difference in use of flow
controls by high-technology and low-technology MRFs reflects the greater capital costs of the former
($4.8 million on average) compared to the latter ($1.9 million on average).
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EXECUTIVE 5LMMARV
Flow Lontrol support of MRFs is largely regional. Of the 26 MRFs supported by now control.
20 are located in the Northeast. The throughput of these MRFs (.928,000 tons/year) represents 86
percent of the total MRF throughput nationwide that is supported by flow controls.
COMBUSTION
MSW is burned in (I) waste-to-energy (WTE) facilities that recover heat from the combustion
of waste to produce either steam or electricity, and (2) incinerators that combust waste without energy
recovery. Of the 32 million tons of MSW that were combusted in 1992, WTE facilities accounted for
31 million tons, and incinerators accounted for 1 million tons. Flow controls have played a
significant role in the waste-to-energy market segment, with at least 58 percent of the waste
throughput supported by flow control.
Market Growth
There was a ten-fold increase in the number of WTE facilities operating between 1980 and
1990. However, only a modest gain in the amount of waste managed by the WTE sector is expected
in the future for the following reasons:
significant slow down in the planning and construction of new WTE facilities
in recent years;
higher capital requirements due to the cost of land and pollution control
measures; ^?' v :;; - ,
:." -*.- . "
i* * -'
increased emphasis on recycling aad waste i
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public opposition; and
State moratoria. <
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Impact of flaw Controls , " -
Row controls have played a significant role in the WTE market segment Of the 145 existing
WTE facilities, 61 have waste guaranteed by flow control ordinances, representing 58 percent of total
WTE throughput. One reason for this nigh percentage is the substantial capital investment required to
coastruct WTE facilities, which typically are financed over long time periods. WTE facility owners
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Page ES-10 EXECUTIVE sLMMARY
and operators need to ensure adequate, long-term supplies of waste and operate at sufficient levels ot
capacity in order to generate revenues to meet debt payments.
A.n additional 40 facilities receive waste guaranteed by contracts, representing 31 percent of
the total WTE throughput. The contractual arrangements may. but need not, be supported by some
form of municipal control over waste disposition: the municipality may collect the waste itself, use
contracts or franchises to control the ultimate destination of waste collected, and/or enact a flow
control ordinance. For example, a local government may use a flow control' ordinance to ensure that
enough waste is delivered to meet the terms of its contract .with the facility. As a result, some of the
facilities with contracts also may be backed by local governments' use of flow controls. However,
data are not available currently to assess how often this situation occurs.
LANDFILLS
Historically, landfills have received the majority of solid waste generated in the United States.
Landfills will continue to be important elements of ISWM systems. The Agency could find no
evidence that flow controls have played a significant role in financing new landfiUs or landfill
expansions.
Market Growth
The number of MSW landfills has declined rapidly since 1988, but this does not appear to
have significantly affected total landfill capacity. Very smatf landfills appear to account for most
landfill closings, and large, regional landfill openings and expansions have offset this lost capacity.
Anticipated growth in the composting and recycling segments, combined wim source reduction
efforts, likely will result in a continuing decline in the amount of waste received at MSW landfills in
the future.
Impact of Flow Controls
Row controls do not appear to have played a significant role in financing new landfills or
landfill expansions. Private landfill firms have demonstrated their ability to raise substantial capital
from publicly-issued equity offerings, indicating that investors ore willing to provide capital for the
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EXECLTIVE sLMMARY Page Eb-11
expansion of landfills without flow control guarantees, in response to a perceived market demand for
this segment.
INTEGRATED SOLID WASTE MANAGEMENT
State and local government officials indicated at the flow controls meetings that revenues
generated by flow controls are used by some local governments to support various elements of
integrated solid waste management (ISWM) systems. In addition to the facilities discussed above.
flow controls are used to support waste collection services such as curbside collection for recycling.
Flow controls also are used to support solid waste services and practices that generally do not lend
themselves to generation of their own revenues (e.g., household hazardous waste collection, source
reduction programs, solid waste planning, public awareness programs, and, in limited instances,
corrective action for past practices).
Where this is done, the costs of the various facility and service elements of the system are
built into the tipping fee of the WTE or other facilities to which wastes are directed through flow
controls. These tipping fees often are higher than the market level. Flow controls ensure that the
waste goes to these facilities, rather than to facilities with lower tipping fees. The additional revenues
generated by the flow control-derived tipping fees are used to fund other elements of die waste
management system such as those noted above.
IN-STATE CAPACITY - '
Flow control'» OM ntediaaiiip tbat State and Ideal goveraraeats can use to foster'
development of in-State capacity fit manage muairipal soHd waste. Flow controls can foster local
capacity by making it easier to adgqoatrly size and finance waste management facilities. Controlling
the disposition of locally-generated MSW allows planners to determine more accurately how much
waste must be managed Similarly, control of the waste ensures that waste management facilities will
** v* - - ^
he fully utilized, wnicn^houid result in cost-efficient operations.
This Report does not assess the relative importance of Mow controls, compared to other
available mechanisms, for achieving in-State capacity goals. Nor was this Report designed to
determine how many State and local governments consider in-State capacity to be an important goal or
how much additional waste management costs (if any) would be incurred in pursuit of such a goal.
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Page ES-i: EXECUTIVE SLMMARV
ARE ALTERNATIVES AVAILABLE OTHER THAN FLOW CONTROL?
Approaches other than flow control which are used to produce revenues for constructing and
operating solid waste management facilities can be categorized as organizational and financial
alternatives.
Organizational Alternatives
»
By using various organizational arrangements, municipalities can direct waste to specific
facilities, similar to what is accomplished through flow control. One approach is for a local
government to own and operate its waste collection system, delivering the waste to the facility of its
choice. Another approach is for the local government to employ the private sector, through contract or
franchise arrangements, for collection services. Contract or franchise agreements can incorporate
specific requirements such as the frequency of collection, inclusion of recyclables, and designation of
facilities to which the collected waste is to be delivered.
Special purpose districts or utilities also can be established to manage municipal solid waste.
The special district or utility then would be able to provide services directly or use a contract or
franchise arrangement with the private sector for services.
Financial
Whichever organizational alternative is chosen, the question of how to pay for the system also
must be addressed. The local jurisdiction can use property taxes or other general taxes as a source of
funds. User fees (either uniform or variable to reflect the amount of waste thrown away) specifically
designated for MSW services can be levied on the generator by the jurisdiction or the private sector
provider. Finally, market-based tip fees can be charged which take into account the facility's cost and
the prices charged at competing facilities.
Taxes and user fees imposed on generators provide a reliable source of revenue. Taxes may
he politically unpopular, but they are relatively easy to administer and serve as the basis for issuing
general obligation bonds. User fees may be seen as equitable, especially if they vary with the amount
of waste thrown away, but they involve relatively greater administrative effort Even when
administered by private service providers, user fees can provide local governments with necessary
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EXECLTIVE SLMMARY _ Puue ES
assurance of financial support when combined with long-term contracts to deliver waste to a given
lid waste management facility.
Some VfSW activities, such as planning and household hazardous waste collection programs.
do not readily lend themselves to user charges. For example, the purpose of household hazardous
waste collection programs would be defeated if user fees discouraged participation. Funding to correct
environmental problems that exist at a waste management facility also may be needed. Market-based
tip fees may not be able to include amounts to account for the extra costs associated with other service
elements of ISWM and remain competitive. As alternatives, taxes and user fees imposed on
generators are possible sources of funding for these activities.
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