CONTRACT NO. 68-01-5034, AMENDMENT #4
A HANDBOOK FOR STATES ON THE USE OF
COMPENSATION AND INCENTIVES IN THE
SITING OF HAZARDOUS WASTE MANAGEMENT
FACILITIES
September 30, 1980
prepared for:
U. S. Environmental Protection Agency
401 M. Street, S.W.
Washington, D.C. 20460
prepared by:
Urban Systems Research a Engineering,
36 Boylston Street
Cambridge, Massachusetts 02138
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TABLE OF CONTENTS
Page
SECTION 1: INTRODUCTION .................... ..... 1
1.1 PURPOSE OF THIS HANDBOOK .................. 1
1.2 HAZARDOUS WASTE FACILITY IMPACT ISSUES AND
PUBLIC OPPOSITION ..................... 2
1.3 RESPONSES TO HWMF IMPACT ISSUES: DEFINITIONS
AND EXAMPLES ........................ 4
1.4 RATIONALE FOR THESE RESPONSES ...... ......... 5
1.5 EXAMPLES FROM OTHER FACILITIY SITING EXPERIENCE ...... 8
1.6 SCOPE OF THIS HANDBOOK ................... 12
SECTION 2: INITIAL CONSIDERATIONS ................... 13
2.1 STATE VERSUS PRIVATE SECTOR PROVISION ........... 13
2.2 GENERAL IMPLEMENTATION ISSUES IN PROVIDING MITIGATION,
COMPENSATION AND INCENTIVES ................ 2i
SECTION 3: MITIGATION TECHNIQUES ................... 35
3.1 INTRODUCTION ........................ 35
3.2 FACILITY DESIGN CHANGES .................. 36
3.3 FACILITY OPERATION CHANGES ................. 39
3.4 FACILITY LOCATION CHANGES ................. 44
SECTION 4: COMPENSATION TECHNIQUES .................. 47
4.1 INTRODUCTION ........................ 47
4.2 MONETARY PAYMENTS ..................... 48
4.3 IN-KIND REPLACEMENT/RESTORATION ACTIONS .......... 59
4.4 CONTINGENCY FUNDS: UNEXPECTED EVENTS ........... 63
4.5 CONTINGENCY FUNDS: PROPERTY VALUE IMPACTS ......... 66
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TABLE OP CONTENTS (Cont'd)
Page
TION 5: INCENTIVE TECHNIQUES 72
5.1 INTRODUCTION 72
5.2 SUITABILITY 76
5.3 STATE PROVISION VERSUS PRIVATE SECTOR REQUIREMENTS ..... 77
APPENDIX A: POWER TO IMPOSE IMPACT RESPONSE REQUIREMENTS ON
A HWMF DEVELOPER 79
APPENDIX B: INTERSTATE ISSUES AND AGREEMENTS 82
APPENDIX C: POWER OP A STATE TO PROVIDE IMPACT RESPONSES 84
APPENDIX D: ALTERNATIVE LEGISLATIVE APPROACHES 88
APPENDIX E: MODEL BINDING AGREEMENTS 89
APPENDIX F: POTENTIAL FOR UNEXPECTED STATE LIABILITY 107
APPENDIX G: PRESENT VALUE OF $1 DUE IN n PERIODS AT i INTEREST
PER PERIOD 112
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SECTION 1
INTRODUCTION
1.1 PURPOSE OF THIS HANDBOOK
Recent discoveries of abandoned hazardous waste sites across the country
have dramatized the need :for environmentally sound hazardous waste management
facilities (HWMFs). Despite this need. States and the private sector have ex-
perienced considerable difficulty in securing local acceptance of HWMFs. Opposition is
strong and is intensified each day by new "Love Canal" revelations across the
country.
There are techniques available to deal equitably and legitimately with
public opposition. The purpose of this handbook is to supply State governments
with alternative techniques for dealing with the HWMF issues that stimulate
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community concern and public opposition. "This handbook serves as an intro-
duction to the concepts and possible uses of mitigation/ compensation and
incentives as tools in the siting of HWMFs. In addition to explaining
these techniques, this handbook explores some of the major issues and problems
associated with their application. The handbook is written from two perspectives:
States may directly provide mitigation, compensation, and incentives to deal with
HWMF impact issues; or, States may require the private sector developers of HWMFs
to provide these techniques themselves. In order for States to exercise either
option, they should have some information on different techniques and on the
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issues associated with these techniques. This handbook is designed to provide
that information.
A strong note of caution is appropriate at this point: the impact
responses described in this handbook will have limited usefulness in many
hazardous waste siting situations. HWMFs induce issues accompanied by highly
emotional feelings which, in many cases, belie the use of the techniques
described below. While the reader's skepticism about these techniques is
justified, the handbook will attempt to show how these techniques can be
very valuable in dealing with HWMF impact issues.
The handbook emphasizes compensation and incentives. This emphasis is
deliberate. Mitigation techniques are much more familiar to States, and, in
fact, are already required in the HWMF siting processes being developed by many
States. There is also no attempt in the handbook to prescribe a recommended
blueprint for States to follow. HWMF siting situations and the impacts associated
with them are very site-specific. The handbook will not recommend a specific
set of compensation and incentives for certain types of communities. Rather,
the handbook suggests types of techniques for different impact issues. Most
importantly, the handbook will provide States with a framework for considering
and evaluating different techniques.
1.2 HAZARDOUS WASTE FACILITY IMPACT ISSUES AND PUBLIC OPPOSITION
Overcoming public opposition is a critical factor in the siting of HWMFs
in the United States. Public opposition to HWMFs stems from a number of potential
impacts associated with these facilities. These impacts concern environmental
quality, health, quality of life, econonmic issues and public service burdens.
Impact issues occur as a result of the construction, operation and long-term
maintenance of a facility.
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The principal impact issues associated with the construction! operation
long-term maintenance of a facility include:
• Traffic - Increased traffic from waste haulers and employees
of the facility; increased possibility of traffic accidents and
spills; wear on local roads
0 Noise - Created by facility construction and operation,
and by increased traffic
• Ground and Surface Water Pollution - At the site during operation and/
or disposal and off-site from transport spills
• Air Pollution - Emissions from incinerators; fugitive dust from
landfills
• Odors - From transport, processing, and storage of wastes
• Aesthetic__Changes - Particularly from incinerators
• Risks - Health and environmental risks associated with accidents,
explosions, leaks, or spills during the operation of a HWMF or
during transport of wastes to a facility; and during the post-closure period.
• Property Values - Decreased property values; of primary importance
to landowners in the immediate vicinity of the HWMF or along routes
heavily travelled by transport vehicles
• Public Services - Increased burdens for highway maintenance; for
fire and emergency spill response; for facility inspections and
monitoring
• Community Stigma - Resulting from the presence of a HWMF; this
may have higher order impacts as well, such as quality of life
losses and even effects on population movements.
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While public opposition often centers-on identifiable potential impacts of
HWMFs, it is clearly not always a rational process. The unknown risks associated
.1 HWMFs often create an attitude of fear and mistrust. The public emphasizes
the uncertainty of risks, and questions the ability of government, industry
officials or anyone to assure long-term safety.
1.3 RESPONSES TO HWMF IMPACT ISSUES: DEFINITIONS AND EXAMPLES
The construction of a IINMF involves costs and benefits to individuals,
groups, the community and society as a whole. Some of the benefits associated
with a HWMF include acceptable disposal for society and profits for the private sector.
If one views the facility impacts as economic costs, mitigation, compensation
and incentives may be used as responses to these costs. In broad terms, these
impact response techniques are means for redistributing the costs and benefits
that result from a HWMF siting. Because there are important differences in how
•*:igation, compensation, and incentives relate to HWMF impacts and costs, it is
—.eful to carefully define them.
Mitigation is an action that prevents or reduces an impact. It basically
represents the first line of defense in dealing with impacts. In terms of HWMFs,
it may mean, for example, redesigning a facility to prevent groundwater pollution
or noise impacts.
Compensation is generally a tool for dealing with unavoidable, intangible,
and unpredictable impacts. It essentially is a means for dealing with impacts
that cannot or will not be mitigated. Compensation attempts
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to make affected interests as well off after the siting event as they were
before. The developer or the State provides benefits equal to the value of
3 impact or cost incurred.
Incentives, on the other hand, provide benefits above and beyond the
costs associated with the HWMF. Cost-benefit balance is not an issue in using
incentives to deal with HWMF impacts. Incentives try to make people better off
than they were before the HWMF siting. Generally, they provide a HWMF developer
or the State goodwill or strategic value in the siting process. Exhibit 1
illustrates typical HWMF impacts and typical mitigation, compensation, and
incentives that may be appropriate in the siting of a HWMF.
There is often a blurry line between mitigation, compensation, and incentives.
The reader should not assume that a clear distinction can always be made between
these techniques. It is almost impossible, for example, to determine the precise
nount of compensation to apply in a siting situation. Therefore, the distinction
oetween incentives and compensation is not always possible to make.
1.4 RATIONALE FOR THESE RESPONSES
In general, mitigation, compensation and incentives:
• Provide a more complete accounting of HWMF costs;
9 Provide an opportunity for HWMF costs to be balanced by
HWMF benefits or developer-provided benefits;
• May help to ensure the siting of environmentally sound
HWMFs and, therefore, help to prevent illegal dumping.
Due to the inherent differences between the three techniques, the rationales
for each one are considered separately.
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Why Mitigate?
First of all, there may be requirements in other Federal, State, or local
ulations to mitigate impacts. These requirements may be specifically-outlined
in local zoning or state environmental impact regulations. Secondly, it may be
more efficient or cost-effective to deal with impacts up front rather than paying
for them later. For example, aesthetic and noise impacts of a proposed HWMF may
pose significant issues — ones that may eventually concern the community in
which the facility is sited. In order to avoid potential complaints that residents
may voice after the facility is built, the developer or the State may buy
sufficient land as a buffer for the facility before construction of the facility.
The developer may also find it considerably more expensive to purchase additional
land later to deal with aesthetic and noise impacts. Airports are prime examples
in which additional land purchases to deal with noise issues are very expensive.
Finally, it may be desirable to mitigate potential or projected impacts for
rategic reasons. A community and its residents will generally be more receptive
to a HWMF where the developer carefully anticipates impacts and takes actions to
prevent or reduce them. By explicitly considering and proposing alternative
mitigation measures, developers or the State may establish credibility and trust
with a host community.
Why Compensate?
While the developer will generally find it desirable to mitigate HWMF impacts,
it may be impossibTe to mitigate all costs associated with a facility. This
difficulty may stem from technical problems, such as the inability of a site
location to be changed; planning problems, such as the difficulties associated with
predicting the type and magnitude of impacts; and economic reasons — it may
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iply be cheaper to site now and pay later. Additionally, mitigation may never
complete for all possible impacts of HWMF siting because some risk will always
i. Compensation is useful in HWMF siting because it provides a mechanism for
spending to the long-term impacts and risks associated with these facilities.
Compensation is particularly useful for resolving the problems of economic
equity associated with HWMFs. Through compensation, the true costs and benefits
a facility can be more accurately figured and evenly distributed, avoiding
:cessive localized costs. In short, compensation can enable a more efficient
id appropriate site selection process.
ny use incentives?
Since incentives represent additional payments in the siting process, they
re not easily rationalized by a cost-benefit framework. Incentives are useful
n HWMF siting for goodwill and strategic purposes. In using incentives a developer
.emonstrates to a host community, group, or an individual the willingness to
-.r additional costs in order to site a facility.
The most important consideration in the use of incentives is their potential
to backfire, i.e., to be counterproductive in dealing with public opposition in the
siting of HWMFs. Incentives that are unrelated and non-responsive to impact issues
that remain unmitigated or uncompensated are especially vulnerable to backfiring.
There is considerably much less backfire possibility if the community initially
suggests the use of incentives.
1.5 EXAMPLES FROM OTHER FACILITY SITING EXPERIENCE
In considering a potential State role for compensation in the siting of HWMFs,
it is useful to briefly consider other facilities that are perceived as objectionable.
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The role of the States in compensating the impacts of these facilities provides
some perspective on HWMF compensation.
There are a number of other nuisance type facilities that typically stimulate
objections in the siting process. Some of the facilities include:
• Municipal wastewater treatment facilities
• Prisons
• Airports
• Energy facilities
While incentives and compensation have been applied or considered in each
of these facility siting situations, the State role has varied considerably. In
municipal wastewater facilities, for example, States provide an incentive to
communities to build the facility through a matching grant to an EPA construction
grant under the Clean Water Act, The Federal government provides 75% of the
•"onstruction cost; States generally provide 15-20t;ancL the communities the rest.
.ne State portion is typically viewed as an incentive to the community to build
sewage treatment facilities. The latter, like a HWMF, is perceived as providing
benefits beyond the local community — thus, the rationale for State subsidy of
the facility construction cost. The combined funds — EPA, State, and local —
are also used for mitigating impacts that are likely to occur from the treatment
facility. Thus, in the siting process, grant recipient communities raay be
required to change the design of a facility, alter operating plans, or even choose
a different location.
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Prisons and airports offer two facility siting situations in which the State
>ften the owner and operator of a nuisance facility. This is in contrast to
the above example. Airports have a relatively extensive experience in the
last 10-15 years with impact mitigation techniques. For example, runway
location, buffer zones, and flight patterns have all been used to deal with noise.
More recently, airports have also used compensation techniques to offset property
value changes. For example, the Logan Airport operation in Boston, MASSPORT,
purchased homes of nearby residents to compensate them for noise effects. There
does not appear to be much evidence for the use of compensation or incentives
in the siting of State prisons. These facilities generally, involve, at a
minimum, however, mitigation actions in the form of buffer zones. In addition,
in-lieu of tax payments are fairly common with prisons.
All of the above situations involve the State in compensation in a facility
.t is publicly owned. While these are useful precedents for a State-owned HWMFs,
most States are initially involved in HWMF siting as a regulator and not as
an owner.
For privately-developed HWMFs, energy facility siting experiences offer useful
analogies for State HWMF compensation approaches. In States where there has been
considerable energy facility development, energy facility siting laws have been
developed. These typically require the energy developer to obtain a number of
permits in order to construct a facility. States have used their permit granting
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uthority to require developers/utilities to compensate local communities for
ocioeconomic impacts associated with the construction of the facility. This
•onuirement may involve grants to the communities or developer-provided services
ch as roads and sewers). A good example is the Washington Public Power Supply
jystem's (WPPSS) $12 million compensation for public facility and public service
Impacts projected to occur from its nuclear power plant construction activities.
Che WPPSS negotiated agreements for this amount in the mid-1970's with 44
iifferent taxing districts. The State of Washington's Energy Facility Site
Evaluation Council encouraged this compensation and served as a mediator during
the negotiations.
Generally, in energy facility siting situations, the States expect or require
the developer to deal direcly with the local community to mitigate or compensate
impacts. Actual State involvement with compensation may be limited to planning
grants or planning assistance. Because of the financial resources that an energy
^aveloper has, States have not felt compelled to subsidize the mitigation or
.opensation effort.
In summary, while States have had a role in nuisance facility compensation,
there are not extensive analogous situations in which States are directly providing
compensation for private facilities. States have been fairly active in compensating
impacts when public facilities or projects are involved. Energy facilities
provide the most extensive examples of compensation for private or semi-public
facilities. And in these cases, States have generally required the developer to
directly provide the compensation.
In considering the utility of mitigation, compensation, or incentives, the
reader should also consider previous experience with HWMF siting. How do you
prevent stalemate from occurring in the siting process? How can you help to ensure
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hat costs are better distributed? Certainly mitigation, compensation and
ncentives have drawbacks — and these are discussed, but their use may ensure
be siting of an HWMF by recognizing HWMF impacts, not by facing-down objections.
6 SCOPE OF THIS HANDBOOK
This handbook provides an examination of the techniques of mitigation,
rompensation and incentives as responses to HWMF impacts. Section 2 explores
jiitial State considerations in using these responses, particularly State versus
>rivate sector provision and basic implementation issues; Section 3 examines
oitigation; Section 4 looks at compensation; and Section 5 reviews incentives.
Several appendices supplement the text: Appendix A discusses the State's power
to impose impact response requirements on a HWMF developer; Appendix B looks
at some interstate issues arising out of state-provided impact response;
Appendix C examines the power of a state to provide impact responses; Appendix
D presents compensation language from selected state legislation. Appendix £
cains two model binding agreements—one between a HWMF developer and a
community and one between a HWMF developer and a resident; Appendix F briefly
examines the liability issue associated with state-provided impact responses.
appendix G is a present value table used in an example in the text.
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SECTION 2
INITIAL CONSIDERATIONS
The application of impact response techniques involves a number of con-
siderations. This section will review some of the key evaluation issues for
States including: the potential problems associated with State versus private
sector provision; and general implementation issues in providing mitigation,
compensation, and incentives.
2.1 STATE VERSUS PRIVATE SECTOR PROVISION
Issues
State involvement in mitigation, compensation, and incentives may open
up the State to a number of potential problems. These may occur depending
on whether the State directly provides the impact response or requires a res-
ponse from the HWMF developer. Major issues include:
• Political Precedent — State involvement in these techniques may
set a precedent for a similar State response in a future nuisance
facility siting;
• Compromised State Regulatory Role — Direct State provision of these
techniques may be viewed by the public as a compromise of the State's
power to also regulate HWMFs;
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• Legal Authority -~ Thexe are legitimate questions abput the
legal authority1 of a State to provide compensation and incentives,
There may also be legal opposition by the private sector to re-
quirements imposed on them;
• Private Market Interference — The HWMF private developer may view
any requirements as interference in the community-private sector
negotiation process;
• HWMF Costs — These techniques will redistribute and alter HWMF costs
whether the State provides the techniques or requires them of the
developer;
• Interstate HWMF Effects — The impact of the two previous issues
may shift the development of HWMFs from one State to another
and shift the transport and disposal between States.
The magnitude of each of these issues varies, depending on the technique,
rfnership (State or private) of the facility, and the institutional arrange-
ment under consideration. While the major issues of State versus private
sector provision will be discussed with respect to specific technique in
Section 3, 4 and 5, it is useful to introduce these issues initially with
respect to different institutional arrangements.
Institutional Arrangements
The basic alternative insitutional arrangements for the provision of
impact response techniques include:
- Private sector provision, no State requirements
- Private sector provision. State requirements
- State provision
- Combination of State and private sector provision
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Private Sector Provision; No State Requirements
This case is a free market situation. Impact responses result from
>luntary negotiations between the host community and the HWMF developer.
The above issues should be negligible in this situation; however, other
concerns warrant consideration. Voluntary negotiations may not occur, or
they may be unsuccessful. This may delay the siting process and hinder
site acceptance by failing to address public opposition. The failure to
provide a contractual arrangement for compensation and incentives may also
discredit the legitimacy of the siting process which may increase accusa-
tions of developer bribery. Such accusations could also delay facility
siting. These considerations have led some States to adopt compensation
legislation for HWMF siting.
Private Sector Provision, State Requirements
The precedent set by State legislation requiring private industry to
provide impact responses is not of major concern to most of the States.
States that have already passed such legislation do not feel that the prece-
dent will create problems in other regulatory areas. The legal authority
of States to impose requirements on private industry is also not a major
issuet In most cases, conditions that impose compensation requirements on
private developers, communities or individuals, may be included in permit
applications for the siting of HWMFs through a State authorized agency or
board. For more discussion of this subject see Appendix A.
State requirements on the private sector to provide impact response
is clearly within the regulatory role of the State. The legal issues generally
revolve around the extent of burden a State may impose in the private sector.
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The type and form of impact response requirements placed in the private
sector by the State have major effects on the siting process. There are two
schools of thought on this issue. Some States and private sector developers
view State legislation with specific requirements — such as, type, amount,
.and recipients of impact response — as inflexible and constraining. They
would prefer to see the developer and host community negotiate unbridled
by State requirements. State requirements on compensation and incentives,
in particular, are -viewed as private market interference. State requirements
take away a developer's bargaining chips. Other States and private sector
developers view a reasonable amount of State requirements as facilitating the
siting process. Legislated requirements, according to this school of thought,
provide a structure in which everybody can then negotiate site-specific
adjustments. All developers start out on this basis; similarly, all communities
start out with a core level of required impact response techniques.
The major effect of State requirements on the private sector to provide
impact responses involves costs. A principal concern here is the economic
burden placed on the developer, and, in turn, the impact of this burden on
the developer's ability to obtain private financing and establish the facility.
Where legislation allows the community and developer to negotiate impact
responses, as is the case in Massachusetts, this flexibility may relieve
some of the economic burden. Additionally, the true costs of HWMF siting
are reflected by the extra costs, which, ultimately will be paid by the
consumer. The state of Connecticut adopted compensation legislation, how-
ever, and found industry very supportive of the requirements despite the
additional costs.
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State legislation may also have interstate effects. Wastes may be
shipped to States where the cost- burden on hazardous waste generators,
and therefore the cost of disposal, is less. This competitive advantage
also resides with facilities established before the legislation since they
do not have the extra costs of impact responses, This will obviously not
be a problem for States with no facilities prior to legislation. Since the
demand for HWMFs is so great, interstate differences in disposal costs may
not effect disposal patterns; it may still be cheaper because of transporta-
tion costs to use the in-state facilities. Appendix B discusses alternative
arrangements for dealing with potential interstate disposal effects.
State provision
State provision of impact response may 'be favorable for a number of
reasons. Exclusive State provision of impact responses may minimize the
possibility or perception of illegal payoffs between the private developer
and a community. It may also help to resolve differences between communities
and the developer and thus help to shorten the siting process. In general,
State provision of impact responses provides the State with additional
control over the entire impact response process.
States should consider a number of issues before directly providing
impact responses. Direct monetary payments from the State for mitigation,
compensation, or incentives may set a political precedent for other public
and private nuisance facilities, A number of States voiced this concern
in a series of interviews with State hazardous waste officials. One way to
diminimsh this possibility is through the use of special language in HWMF
impact response legislation that deals with the extraordinatry circumstances
surrounding HWMF siting.
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State provision of impact responses may also undermine the credibility
3f the State regulatory role. This is an important consideration and one
t is also of concern to many State hazardous waste agencies. The public,
for example, may perceive the States as unable to adequately regulate a HWMF
in which they have provided a substantial investment for impact response,
The potential conflict of interest in State roles is minimized, however,
if States provide impact responses to communities rather than to developers.
There is also precedent for State aid to and regulation of a particular
party. For example. States subsidize municipal wastewater treatment plants
and the same State agencies regulate them. States also provide a number
of subsidies, such as economic development loans to private industry, and
also regulate their activities. One precaution that States could implement
to minimize conflict of interest charges is to have a State agency, separate
from the regulatory agency, to be responsible for impact response activities.
Legal Authority should not be a problem for State provision of impact
-isponses. States possess the power to tax and spend in the public interest,
and may determine what goods and services they will provide and how they will
be financed. For a more complete discussion of this issue, see appendix C.
State provision of impact responses effects the cost of HWMF siting by
reducing part of the economic burden on industry. States, in effect, absorb
some of the HWMF costs in order to facilitate the siting process. This
State role thus acts as an incentive to private developers in the siting of
HWMFs, While this may be questioned as a subsidy to the private sector,
State subsidies to private industry already exist in a variety of forms
including the development of highways to industrial parks and low-cost
industrial development loans.
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Despite the incentive intentions of State-provided impact responses,
there may be impacts on the private market and interstate disposal costs.
If State involvement in HWMF impact response provides the private developer
with a competitive advantage over other HWMFs, cheaper waste disposal rates
may attract out-of-state wastes. It may also affect disposal patterns at
existing facilities in the State. A key issue for the interstate problem
involves the distribution of costs. This is directly related to the
financing techniques and response method employed. In the case of State
provision of compensation through the use of general funds, State residents
absorb the compensation costs, and in this way subsidize out-of-state waste
disposal. There are two ways to deal with this issue: develop agreements
with governments from out-of-state users; or legislate a surcharge on HWMF
disposal fees for out-of-state users. See Appendix B.
In general, the cost issues surrounding State provision of impact
responses concern basic political policies on economic efficiency and equity:
Who should bear the costs of HWMFs? Users/ host communities, society at large?
The type and provider of impact responses, influences the siting efficiencies
and the distribution of HWMF costs. States will have to independently evaluate
their needs with respect to the use of these techniques, analyze how they may
ease siting difficulties, and distribute the costs and benefits of these facili-
ties. The techniques in the sections below illustrate different cost and equity
effects for the States to consider.
Combination of State & Private Sector Provision
Mitigation, compensation, and incentives may be supplied in a number of
different combinations by the State and private sector. The types of issues
for the State to consider here may be different than just the aggregate of
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State provision and private sector provision issues. State provision of
compensation, for example, may offset the economic burden imposed by a
State requirement for mitigation. Because there are so many different' com-
binations it is impossible to discuss generic issues. The following example
shows how one combination of State and private sector provision of impact
responses may affect issues previously discussed.
In this example, the State provides incentives to the host community,
such as extraordinary road improvements and additional emergency equipment
to the community, while requiring the developer to provide compensation to
the host community through a tipping fee of 5C/gallon of disposal waste.
A political precedent is being set by the State provision of incentives.
However, the compensation provided by private industry may counter balance the
visibility, and relative importance of the precedent being set by the State.
The State regulatory role is not compromised by the provision of incentives,
although any direct monetary involvement may be criticized. Many of the cost
issues previously discussed still apply to this situation depending on how the
incentives are financed by the State. Some of the issues may be minimized
by the combination of State and private sector provision of impact responses.
For example, although the incentives provided by the State may subsidize in-
dustry, the private sector provision of compensation to the community will
increase the developer's disposal costs to reflect the true costs of HWMF
disposal. Thus, the competitive advantage or disadvantage that would be
induced by provision of impact responses from just one of these parties may
be negated by the combined provision. Clearly, various provider combina-
tions will influence the major issues of State versus private sector provision
of impact responses.
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2.2 GENERAL IMPLEMENTATION ISSUES IN PROVIDING MITIGATION, COMPENSATION,
AND INCENTIVES
The basic implementation issues in providing mitigation, compensation,
and incentives include:
• Determining impact issues and local concerns,
• Identifying potential recipients.
• Selecting appropriate techniques,
• Determining amount of response.
• Determining timing of response.
• Selecting finance mechanisms.
• Developing binding agreements between provider and recipients.
These issues characterize any effort to provide impact response whether
the response is supplied by the developer or the State. This section
briefly introduces these issues so States can consider them before developing
impact response legislation,
Determining impact issues and local concerns
The first step in implementing an impact response technique involves
identifying the impact issues and local concerns. Four basic impact charac-
teristics will determine the range of impacts associated with a facility:
• Impact type.
• Impact magnitude.
• Impact incidence (who & where}
• Impact timing (when & duration)
This impact discovery and characterization process for each site will
undoubtedly uncover a number of environmental and socioeconomic impacts such
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as those listed in Section 1. The State may formalize this process
through an environmental impact review process.
Obviously, impact identification should carefully consider local
concerns. Since impacts are perceived by the community differently than
by a developer. States should consider a formalized process for including
local concerns.
Impacts occur when the characteristics of a specific HWMF interact with
the conditions existing at the site where the HWMF is located. Thus,
a HWMF with a capacity of 200,000 gallons/day may stimulate 40 trucks
coming and going to the facility each day. Site specific access condi-
tions and land use characteristics will affect the severity of this traffic
Impact, and the perception of its significance. There may be minimal
impacts in a heavily industrialized community with existing good access to
the facility. In a suburban location, on the other hand, traffic may be
a critical issue.
Most State regulatory agencies are aware, of course, of the difficulty
of accurately predicting all of the impacts associated with any facility.
This handbook does not presume that this process is easy or that all impacts
will emerge in the impact discovery process. At best, some issues may only
be red-flagged. In these cases, impact response contingency arrangements
are appropriatet
Identifying potential recipients
The impact characteristics will influence this process. Property value
issues may be of interest to land owners, for example, in the immediate
vicinity of the HWMF or along transport routes. Community water supply
22
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unpacts, on the other hand, affect the entire community, Risk impacts,
in many cases, cannot be parceled out neatly to recipients. Because
antial recipients will vary by impact issue, a mix of impact responses
is often desirable. For example, cash payments to the host community will
not adequately address impacts in neighboring communities. These communities
may require mitigation measures or incentives.
In fact, identification of the parties affected by each impact issue
will aid in the choice of response techniques, A formalized process for
this identification will be particularly useful in avoiding accusations of
unfair and nonresponsive compensation and mitigation. Again, however, this
handbook recognizes the complexity of impact incidence. States and de-
velopers of HWMFs may simply not be able to define initially all those
affected by impacts.
lecting Appropriate Techniques
Selecting the appropriate impact response technique involves a number
of considerations, including;
• Impact Issue/Impact, Response Matching
• Legal authority,
• Cost~effectiveness«
• Strategic value,
• Secondary impacts,
Issue/Impact Response Matching
This issue may not be a major concern to some States. Once the HWMF developer
has identified both impacts and impact incidence to the maximum extent possible,
23
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the State may not care what type of responses are actually applied,
The State may only be concerned that impacts are mitigated in or compen~
sated. The handbook discusses State considerations for specific tech-
niques in Sections 3, 4 and 5, As seen in these sections, some techniques
are more appropriate for certain impact issues. In general, mitigation
is the first category of impact response to consider. In practice, however,
mitigation techniques are not totally suitable for all impact issues, Some
impacts are unavoidable and cannot be mitigated; others are difficult to
predict. In these cases, some type of compensation is clearly warranted.
But developers and States obviously should not feel constrained by any "impact
issue/impact response matching" rules. There simply is not a best or clear-
cut formula to apply. Incentives, for example/ may or may not be directly
related to impact issues. Those that are not related to specific HWMF
impacts, however, may still have an important influence in siting the HWMF.
Authority
Pre-existing regulations or authority may constrain the implementation
feasibility of a particular impact response. An example of this involves
alternative trucking routes as a response to traffic impacts. In this case,
one of the alternatives may involve rerouting traffic along different high-
ways to avoid residential areas. Existing Federal and local highway regula-
tions, however, may preclude the use of alternative routes. In terms of
compensation, State constitutions may forbid the State to commit itself
to long term monetary arrangements. Thus, the State may not be able to
agree to provide compensation funds to a community on an on-going basis,
24
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Cost-Effectiveness
In most cases, mitigation, compensation and incentives will add costs
to the overall HWMF project. As argued in Section 1, these are "legitimate"
costs that have often not been reflected in previous HWMF sitings. The
magnitude of these costs will, of course, be dependent on the type of
impact issue under consideration. In some cases, however, a number of
techniques may adequately deal with a specific impact issue. Refer to
Exhibit 1 in Section 1. In these cases, cost-effectiveness can be used as
a selection criteria. For example, as a response to the aesthetic impacts
of a HWMF, mitigation measures might include developing a buffer zone or
relocating the facility on the site. Compensation would involve direct cash
payments to the affected parties. It may be cheaper to provide the buffer
zone as well as administratively easier.
Different techniques and financing methods will also clearly involve
different administrative costs. A response involving ongoing payments from
the State to a community will require some type of a distribution program.
One-time up-front payments, or direct payments from industry to the community
will not add this expense to the State, The administrative costs of different
techniques should be included in cost comparisons.
Cost should also be determined in present value terms in order to adequately
compare one-time costs with techniques that involve on-going costs. See Exhibit 2
for an illustration of this concept.
Strategic Value
The choice of impact response techniques obviously involves strategic con-
siderations. The political acceptability of an impact response will be a
25
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EXHIBIT 2
PRESENT VKLJJS ANALYSIS
xition; Present value analysis is a technique for comparing the costs of alternative iaaact
anse schemes having different time streams of capital and recurring costs. The present value
uture cost represents the sum that would provide an equivalent income stream, if held in a
which yielded the current rate of interest. In reality, there is no one current rate of
rest. The current rate at which one must borrow funds, however, is generally acceptable.
The formula for determining present value if the HWMP impact response period is T years
re
C • Capital costs at time n
0 • Other costs at time n
PV - I/O. + t)n. when i -
n
1UQ
Impact response capitol costs may involve new roads or buffer zone purchases; other costs
j be tipping fees or other on-going payments.
mole: Rather than use the present value formula, one can consult a present value table as
own in Appendix C and use the present value factor for a specific interest rate and tise period.
simplified example is shown below i
Impact Response Alternative 1
Project Start-up;
• New fire truck to host community
* loop sum payment to property abutters
• Payment to host community to fix access road
Continuing;
• Tipping fee to host community
• Tipping fee to neighboring communities
Impact Response Alternative 2
Project Start-up;
• Lump sum payment to property atwtters
Continuing;
• Tipping fee to host conmunity
• Tipping fee to neighboring communities
$ 80,000
$ 45,000
$300,000
$425,000
$ 50.000/year
S 10,OOP/year
$ 60,000/year
$ 45.000
SlOO.OOO/year
S 10,OOP/year
5110,000/year
Assumptionst 20 year planning period
Interest Rate: 10%
(Private sector)
Alternative 1.- PV - 542S,OOO(.1486) * * ($60.000X20 years) (.I486)
m $63,155 + $178,320
• $241,475
Alternative 2i pv • $45,000(.I486) + ($110.000) (20) (.1486)
• $6,637 + $326,920
- 5333,607
*rrcm Appendix C
26
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\jor factor in HWMF siting. For example, there is substantial mistrust
ay the public about the technological adequacy of HWMFs, A well~conceived
mitigation and compensation strategy may be insufficient to overcome this mistrust.
Without third-party monitoring above and beyond what is required, public
opposition may remain entrenched. In general, host communities and other
sources of public opposition may not place much credibility in a HWMF
developer's operation promises, or promises of State enforcement. These
mistrust and enforceability issues may well be addressed in many cases via
the incentive of third-party monitoring,
Secondary Impacts
An important consideration in selecting an impact response concerns
the indirect or secondary impacts that responses induce. Simply put,
solution to one problem may lead to another problem. For example, one
solution to increased truck traffic to a proposed HWMF is to build one or
more transfer stations and ship the waste in fewer and larger vehicles,
This alternative essentially involves siting an additional HWMF to facilitate
the development of an already proposed HWMF. The solution may require as
many complex negotiations and impact issues as the original facility.
Each of these considerations are relevant to the selection of an appro-
priate impact response. From the State perspective, the diversity of the
considerations implies that comprehensive HWMF impact response legislation may
be difficult to develop. Massachusetts and Connecticut offer two contrasting
examples of States that have recently passed hazardous waste siting legis-
27
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ion that includes a provision mandating developers to provide compensation,
cue legislation, however, merely requires the activity <~ it doesn't spell
jut precise requirements. Site specific negotiations between the developer
and a host community will determine the appropriate techniques according to
the Massachusetts approach, though the State may also act as an arbitrator.
Connecticut, on the other hand, recently passed legislation specifically
spelling out the type and amount of developer compensation to a HWMF host
community, Kentucky has also recently passed similar legislation. In
both cases, the developer pays a tipping fee to the host community based
on the amount of waste handled at the HWMF. See Appendix D for these
alternative legislative approaches. The Connecticut and Kentucky legislators
do not pretend to offer comprehensive impact response approaches. Rather,
they require a core starting point from which additional site-specific
act responses could be negotiated by the developer and affected com-
munities. The Massachusetts approach assumed that the whole package of impact
response should be negotiated.
Finally, the consideration of each of these factors in selecting appro-
priate impact response techniques is obviously not a clear-cut exercise. A
hypothetical example is shown in Exhibit 3 to illustrate the difficulty in
selecting among impact responses. In this particular example, the choice
is among different mitigation techniques to deal with truck traffic impacts.
Inqpleinentation feasibility encompasses, in this example, legal authority and
political acceptability issues. The example illustrates the tradeoffs that
have to occur in selecting impact responses. The most effective measure—the
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CHIBIT 3
Mitigation Alternatives
For Dealing with HWMP Truck Traffic Impacts (Hypothetical Example)
MITIGATION
ALTERNATIVES
COST*
EFFECTIVENESS
IMPLEMENTATION
FEASIBILITY
SECONDARY
IMPACTS
Reduce Size
of HWMF
$3,600,000
(lost profits)
Will cut truck
traffic by 50% to
HWMF
No special problems
except for financial
feasibility of a
smaller facility
Will require another
facility in the metro-
politan area to meet
hazardous waste disposal
needs; higher disposal
costs t.o industry
B.
vO
Reroute
traffic along
different
highway(s)
$ 750,000
(cost of repair-
ing alternative
route)
Will eliminate
traffic in residen-
tial area; shift
traffic to rural •
route; difficult
to enforce
May shift political
opposition to another
area; otherwise no
special problems
Fewer people affected by
rural route, hut op-
position may be en-
countered
Construct
transfer
station in
another area;
use larger
haul trucks
$4,200,000
Will cut truck
traffic by 75%
to HWMF
Will be politically
difficult unless done
in local industrial
area
Will require the siting
of the transfer station
with all of its attendant
impacts; increased risk
due to extra handling;
roadways may deteriorate
more quickly
D.
Limiting HWMF
operatine
hours to
strictly
9:00 AM to
5:00 PM
$ 500,000
(lost profits)
Will eliminate
truck traffic dur-
ing sensitive
hours
No special problems
Will concentrate truck
traffic' in peak traffic
hours, thereby increasing
traffic accident risk
*These are costs (capital, 0 & M, lost profits) to the developer or to the State and are expressed in present worth
terras on the basis of a 20 year design life for the 1IWMF.
-------
•ansfer station alternative—is also the most explosive and is complicated by
ie political problems of siting another facility. The least expensive option—
.imitations on operating nouns—does not totally prevent the problem.
gtennining Amount of Response
•The amount of mitigation, compensation or incentives to be used is
xjtentially the most negotiable aspect of impact response implementation.
is mentioned above, the States that have adopted compensation legislation for
compensation in HWMF siting have chosen two basic approaches with respect
to the amount of compensation: an open model and a closed model, Massachusetts,
believing that the main purpose of legislation is to legitimize the compensa-
tion process, has an open model. The Massachusetts legislation explicitly
allows any conceivable type or amount of compensation to meet any conceivable
adverse impact. Communities and operators are free to negotiate any agree-
ment providing that it does not reduce environmental controls below the level
•mired by the State. Kentucky and Connecticut use a closed model. In
_ese States a specific amount based on the waste volume or revenues of the
HWMF developer is paid to the host community. Even with closed model, legis-
lated amounts, however, can remain somewhat negotiable. For example, in
Kentucky the local governments are left with the decision of whether or not
to tax the HWMF's revenue.
These two methods have advantages and disadvantages. When the amount of
compensation is fixed, the siting process is likely to proceed more quickly.
Additionally, both sides know what to expect. The developer knows the cost and
can factor it into his calculations while the community can determine if the re-
quired compensation is sufficient. The disadvantage of the closed approach rests
with its inflexibility. The payment may be too low or high for a given situation,
and it-may not allow for other types of responses. Also if the required payment
too high, HWMFs may not be able to afford to provide other more effective or
30
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iesired compensation, or mitigation measures. The major problem associated with
the open model is that it may lengthen the negotiation process.
ermine Timing of Response
The implementation feasibility of a particular response is directly
related to the timing of an impact. While some impacts, such as construction
noise, occur for a limited length of time, others, including those related to
facility operation, occur continually over time, The acceptability of a res-
ponse is related to how adequately it deals with the timing of a potential
impact. A response offered on an ongoing basis, such as direct monetary com-
pensation based on HWMF waste tonnage, can deal with impacts as they occur.
It nay not, by itself, however, successfully provide for post-closure impacts.
A one-time payment made up-front, or a design-change mitigation technique does
not address ongoing, operational impacts. Obviously, some responses will be
better suited for certain impacts than others. Incentives may be more appro-
nriate for impacts relating to the community image, while compensation, in
,e form of land value guarantees to property owners, may address property
value impacts more completely.
Selecting Financing Mechanisms
One of the most difficult issues facing States that provide HKKF impact
responses, whether it be monetary payments, in-kind replacements, or contingency
arrangements, is the finance issue. There are three general approaches to
financing State-provided impact responses:
1) State general funds,
2) Fees or taxes on private HWMF operators, disposers,
or generators.
3) Some combination of 1 & 2,
A number of specific State statutory constraints will affect the finance
'ecision, such as limits on bonding. In addition to these considerations,
uowever, States should also consider the equity and hazardous waste disposal
31
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market impacts, of their; financing decision. Reliance solely on State
general funds potentially burdens all of the State residents with HWMF
impact costs. This financing method may also result in a State subsidy
to new HWMFs allowing them to gain a competitive advantage in the HWMF
market over existing in-state and out-of-state HWMFs. As alluded- to
earlier, this may alter transportation and disposal patterns of hazardous .
wastet The use of HWMF disposal fees to finance State-provided impact
response will distribute the disposal costs more equitably but may weaken the
competitive advantage of new HWMFs with respect to existing HWMFs,
A summary of State finance options is presented in Exhibit 4 .
Binding Agreements
When the State directly provides impact responses or if it requires the
private sector to do so, generally an agreement will be necessary to ensure
recipients that the provider will supply the promised response, In the
first case the State may have to enter into agreement itself with recipients;
in the latter case the State may want to review impact response agreements
between a HKMF developer and a recipient. Appendix E presents two model
agreements: one between a developer and a local government; and one
between a developer and a private citizen. Appendix E also discusses the
issues associated with bringing agreements and for impact response techniques.
In general, these agreements face the following obstacles:
Local governments cannot contractually bind the community to
refrain from exercising its police powers in the future. Thus,
an agreement between a HWMF developer and a community will
probably not have quid pro quo arrangements. Rather, the
agreement is more of a mechanism for developers to demonstrate
their commitment
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At/TERWATIVE
3 FOX BTJVTB FBOVH-gO MMMT
METHOD
DRFINITIOM
USEe/EXAMrMSS
General Obligation
Bonds
These bond* are backed by the "full
faith and credit" of the issuer and
are generally financed by taxes and/
or revenues from user charges.
Suitable for compensation that Involves
one-time capital expenditures.
These bonds typically carry lower Interest
rates than revenue bonds. Amount of indebted-
ness capable of being Incurred might affect
the use of this mechanism.
Revenue Bonds
In this type of bond, payments are
derived strictly from charges for
services provided.
These are also generally used for
capital costs, particularly in cases
where charges can be easily matched
with compensation provided. They are
also attractive where statutory limi-
tations prohibit additional debt via
general obligation bonds.
These bonds typically carry higher interest
charges than general obligation bonds.
3. Grants/loans
These are cost sharing sources out-
side the jurisdiction. They are
generally used to finance a portion
of the capital costs of a project.
The State may be able to obtain grants/
loans from the Economic Development
Administration or regional conmlg-
sions. In addition. Federal categorical
grants, such as highway money, could
be used to finance in-kind compensation.
By subsidizing a portion of the capital costs,
grants and loans will, of course, reduce the
State's share of compensation costs. This may
be critical to political acceptability of a com-
pensation measure. Cost-sharing programs, how-
ever, may Impose conditions that may be unaccept-
able to the State.
4. General Operating
Revenues
These funds may come from a variety
of State sources, such as miscella-
neous fees', fines, and taxes.
These are suited to recurring
compensation costs or capital costs.
They can also be set aside money for
sinking funds that can be used for
specific compensation projects.
The use of general operating revenues distri-
butes compensation costs to both users and non-
users. Sinking funds, much like a private
savings account, use past revenues to fund
current projects.
5. User Charges
User charges are revenues derived
from a user of a project or service
and are based on actual or surrogate
measurements.
The State may collect these from dis-
posers or operators of an IIWMF to finance
capital and recurring compensation costs
User fees ami charges are designed to maximize
the "earned rewards" principle by charging users
for services received. A consideration in setting
user fees Is the impact that it might have on the
user. If States try to totally recover compensa-
tion costs through user fees, they may stimulate
non-use of on environmentally suitable IIWMF and
use of ill«V}
-------
Agreements with local governments are, of course,
not binding on the residents of communities, Thus,
for some impact issues the developer will have to
develop agreements with individual residents or
groups.
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SECTION 3
MITIGATION TECHNIQUES
3.1 INTRODUCTION
Mitigation generally involves an action that attempts to prevent or reduce
impacts from occurring. The key aspect of mitigation is its preventative
nature. As discussed in Section 1, there are several reasons why mitigation
is appropriate in the HWMF siting processes:
• It may be legally required by federal, state, or local regulations;
• It may be cost-effective to avoid impacts rather than paying for
them later;
• It may be strategically useful in demonstrating commitment and
credibility in the siting process.
Because mitigation measures are very site-specific in nature, the handbook
will not attempt to cover every mitigation technique that may be appropriate
in HWMF siting. Rather, the subsections below discuss generic types of miti-
gation actions that are appropriate in the HWMF siting. HWMF mitigation actions
include the following generic types.
• Facility Design Changes
• Facility Operation Changes
• Facility Location Changes
35
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FACILITY DESIGN CHANGES
icription
"his technique includes physical changes and adjustments to the HWMF design
construction. Changes may include both deletions, such as a change in the
ze of the facility; modifications, such as the change in height of an incin-
ator stack; or additions, such as the purchase of additional land to serve as
buffer zone between the facility and neighboring properties. In addition to
tese variations, facility changes encompass, for the purpose of our definition,
tianges in the vehicle design used to haul hazardous waste to a HWMF. For
sample, the addition of a spill containment system on a waste haul vehicle
institutes a design change.
angles
Mitigation techniques involving design changes are probably the most
common mitigation measures appropriate to HWMFs. The concern in this handbook
' 'ith mitigation measures that are generally not part of typical permit
tu^oirements. The types of design changes beyond those required by the per-
aitting authority include, for example, the following:
• Additional or thicker liners for landfill facilities;
• The addition of separate trenches in landfill facilities for
segregating wastes;
9 Increasing stack heights to disperse incinerator particulates;
• The incorporation of large buffer zones or earth berms in the
HWMF to minimize aesthetic and noise impacts;
• Changes in the HWMF access road;
• Emergency spill containment systems provided on-site and on haul
trucks.
uitability
Mitigation techniques involving design changes may be appropriate for a
-nber of impact issues, including the following:
36
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• Traffic impacts
• Noise impacts
• Air pollution
• Ground and surface water pollution
• Aesthetic impacts
In many cases, design changes can prevent or significantly reduce the above
inpacts. In general, these impacts have one thing in common—they are fairly
tangible in nature. This, in large part, explains the effectiveness of design
changes. On the other hand, the following impacts are more intangible in
character:
• Risk
• Community stigma impacts
• Property value changes
These impact issues are highly interrelated. Because these issues are
more intangible, they are more difficult to predict, and therefore more diffi-
cult to mitigate. For example, the mere presence of a HWMF in an area will
likely affect abutting property values. Design changes may reduce or eliminate
the impacts that in part stimulate property value impacts—noise, traffic, air
pollution. But these mitigation measures are unlikely to fully eliminate the
risk issue. The fear associated with risk is likely to be an on-going factor
influencing property values.
General Issues
Beyond the fact that mitigation measures in the form of design changes
may be required as part of the permitting process, other design changes are
useful for the following reasons:
• They give the developer or the State credibility in negotiating
with opposition groups.
37
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• While the State has broad discretionary powers over the private
developer, the economic burden placed by the State in the form
of excessive design change requirements bears careful considera-
tion. Judgements exercised by the State on these impacts
responses require a balance between costs and impact management.
It may be just as adequate to deal with some impacts via compen-
sation techniques and at the same time maintain the financial
feasibility of the site.
• While State sharing of this type of mitigation would potentially
relieve the economic burden on the private sector, there are
other more appropriate State incentives that could be used to
deal with the issues that this mitigation technique is intended
to resolve. These include site banks and facility development
loans to the private sector.
3.3 FACILITY OPERATION CHANGES
Description
This technique includes a number of actions that prevent or reduce impacts.
These actions encompass changes in the on-site operation of the HWMF, such as
operating hour changes, waste handling procedures; changes in off-site operation;
su«-K as waste hauling routes; and changes in the types of wastes allowed in the
fw -ity.
Examples
The most extensive examples in this mitigation category encompass precau-
tionary techniques. These techniques generally try to reduce the risk of an
accident from occurring; to enhance the capability of the operator or the host
community to respond to an emergency situation; or to provide an early warning
system. Examples of these techniques include:
• Monitoring, including groundwater and surface water;
• Agreement to independent site and facility inspections;
independent monitoring; or independent environmental audits;
• Purchase and use of accident or clean-up equipment, including
fire trucks;
• Qnergency response procedures;
o Security plans and procedures;
• Employee training in security and emergency response.
See also Exhibit 5.
39
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Exhibit 5
MONITORING: CASE EXAMPLES
The City of Indianapolis attempted in 1978 to develop a. waste-
water sludge plan that involved disposing its sludge from
existing lagoons into nearby farms. In order to successfully
implement its plan, the city had to agree to subsidize the
Indiana State Board of Health to monitor potential ground-
water contamination and to inspect private wells nearby.
The IT Corporation of Los Angelest California directly pro-
vides groundwater monitoring at a HWMF in Benecia, California.
These monitoring wells were negotiated with the State and cost
the IT Corporation approximately $lSOtOOO/year.
An additional variation on monitoring arrangements was agreed
to by the Boston Edison (BE) Company and the Massachusetts
Wildlife Federation (MWF) involving radiological monitoring
at the Pilgrim nuclear power plant in Plymouth^ Massachusetts.
When attempting to build an additional facility at the exist-
ing power plant, BE was confronted by the MWF about the
monitoring issue, A settlement agreement was negotiated in
1976 which included^ in addition to BE's monitoring program,
an oversight advisory committee to administer the monitoring
program. This committee was comprised of members from 3E3
and State agencies.
40
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Monitoring, in particular, is widely used as an attempt to provide an
warning system for potential problems as seen in the examples in Exhibit 5
jjese examples include non-HWMF experiences.
an interesting example of an operations-related technique to deal with
public opposition for a private HWMP facility is the use of the State to actu-
jlly operate the facility. The rationale behind this approach is very simple:
the State is viewed as more likely to protect the public interest in operating
aBHMF. While most States view the ownership and operation of HWMFs as private
sector responsibility, States are not totally foreclosing the option of operating
privately-owned and publicly-owned HWMFs. The Maryland Environmental Service
(MES), for example, has legislative authority to operate a number of environ-
aental 'facilities. These include municipal wastewater treatment facilities,
wnicipal drinking water facilities, solid waste landfills, and hazardous waste
'••cilities. In an attempt to site a hazardous waste landfill in Rossville, MD
, dispose chromium waste from its Baltimore plant, Allied Chemical proposed
the use of the MES to operate its facility. The HWMF site was eventually re-
jected by the county for a number of reasons unrelated to MES' proposed opera-
tion of the facility. The only other State that has shown much interest in
operating facilities is New York. There appears to be widespread support for State
operation (and ownership) of private HWMFs in New York because of the adverse
publicity associated with privately-operated HWMFs in New York. The only public
body that is moving quickly towards public operation of HWMFs is the Gulf Coast
Authority in Houston, Texas. This is a special district arrangement in which
taste generators are cooperating with this special authority to jointly finance
own a HWMF.GCA will operate the facility after it's built.
41
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Other common facility operation examples that potentially mitigate impact
issues include:
• Operating hour limitations
a Changes in the wastes allowed in the HWMF
o Waste haul route changes.
Suitability
Operation techniques are applicable to a wide variety of impact issues as
seen by the examples. The precautionary techniques are particularly suitable
for the following issues:
• Ground and surface water pollution
• Odors
• Risks
State-provided operations may potentially mitigate all of the impact issues.
(Derating hour changes are suitable for noise impact, traffic impacts, and, to
a less extent, property value effects. Changes in allowable wastes directly
deal with the risk issue; while waste haul route changes are best suited for
the noise, traffic, highway maintenance, and risk issues.
General Issues
The issues associated with mitigation design changes, cited in Section 3.2,
also generally apply to the use of operational techniques. In many cases,
however, operation changes, such as truck rerouting or operating hour changes,
will allow for cheaper mitigation techniques than design changes.
One issue associated with operation-oriented mitigation is the question
of enforceability. Host communities and other sources of public opposition
Bay not place much credibility in an HWMF developer's operation promises.
This distrust and enforceability issue may preclude the ability to use some of
these mitigation techniques as alternatives to design or location changes.
42
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Efforts by the developer to involve impartial, technically-competent,
third parties in the monitoring and oversight arrangements may be crucial in
overcoming this distrust. This type of independent monitoring is likely to be
one of the most important impact responses in HWMF siting. Ironically, its
popularity stems from a distrust of both private sector operation practices
and State regulation of these practices. This contrasts with public support
in some States, notably New York, for State-operated HWMFs. The Boston Edison/
Massachusetts Wildlife Federation example in Exhibit 5 is a good example of
third party monitoring. The implementation requirements for third party moni-
toring, besides financing and a binding agreement, include: determining moni-
toring issues (e.g., groundwater, staff training, emergency containment systems);
choosing the third party (private sector, environmental group, host community,
combination of these); and determining the frequency of monitoring.
State Provision Versus Private Developer Requirements
When the State is both the owner and operator of a HWMF or, as in the case
of the Maryland Environmental Service (MES), is potentially the operator of a
private facility, operational changes are clearly legitimate mitigation measures
for the State to provide-. The more problematic case concerns the extent to
which the State should be involved in operational aspects of privately operated
HWMFs. As in the case of the previous mitigation technique, the role of the
State as a regulator is a key issue.
In serving its regulatory function, the State will require that certain
operating precautions be taken. Some of these, such as groundwater monitoring,
will be mandated by RCRA requirements. Even if the State imposes strict emer-
gency response and monitoring requirements on a private developer, the State,
as part of its regulatory function, will also serve in an oversight or monitor-
ing function. To offset the costs associated with this function, the State
43
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nay require the developer to pay inspection and monitoring fees. Several States
iupose a multi-purpose fee on HWMFs based on annual tonnage of waste handled
at is used to support the State monitoring, inspection, and permitting program.
As a means of stimulating further HWMF operating credibility, the State may also
require the HWMF operator to fund third party participation in the' monitoring
function.
As in the previous mitigation technique, State operational requirements
on private developers have to be exercised with some caution. Operational
changes can be a very effective and inexpensive way of mitigating impacts. But
some requirements, such as increased security and monitoring, are not trivial.
And unlike design changes, the costs of which may be paid once by the developer,
operational requirements may pose recurring costs.
3.4 FACILITY LOCATION CHANGES
Description
This mitigation technique is the most drastic since it deals with site
specific impact issues by attempting to use an alternative HWMF site. A
variation of this technique, when a large site is involved, is to alter the
location of the facility within the original site.
Examples
Until recently, careful consideration of alternative sites has not charac-
terized the HWMF siting process. The recent passage of hazardous waste siting
legislation in many States has altered this—increasingly the siting process
is starting with several sites. The Delaware River Basin Commission, New York
State, and the Now England Regional Commission have all actively supported
efforts to identify areas suitable for HWMF development.
44
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Suitability
In the face of considerable public opposition, this technique may be the
y feasible means for siting a new HWMF. It may be extremely difficult, how-
ever, to shift to another site for financial and environmental reasons. In
particular, if the developer or the State has not located other environmentally
suitable sites, the process of determining these may take several months. Or,
there simply may not be other sites as environmentally suitable. Environmental
suitability will generally be the dominant criteria when the facility type
involves some type of land disposal, such as secure landfills or deep well in-
jection .
General Issues
This technique is a last resort type of approach since it basically in-
volves starting the siting negotiation process over again. In short, the
shift to another location will merely raise a whole new set of impact issues.
-Unless the developer or the State has developed suitable alternative sites,
.5 mentioned above, this mitigation technique will also be very difficult to
implement.
Facility location changes within a large site are obviously easier for
an HHMF developer to accomodate. Any location changes within a site, however,
will undoubtedly involve tradeoffs among impact issues. For example, in order
to respond to a larger buffer zone request, soil suitability may be compromised.
Alternatively, the facility size may have to be reduced in addition to changing
its location within a site.
State Provision Versus Private Developer Requirements
Some States require that private developers present alternative sites
to the State HWMF siting council. This helps to overcome the delay associated
with the siting process, though it certainly may not preclude public opposition
45
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from being generated at a new proposed site. While they should be considered
tore in terms of incentives to the developer rather than to a community, such
<*ate activities as site banks are clearly methods to implement this mitigation
jhnique.
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SECTION 4
COMPENSATION TECHNIQUES
4.1 INTRODUCTION
Mitigation techniques may address a number of HWMF impacts. It's highly
unlikely/ however/ that all impacts will be (or in some cases should be)
addressed by mitigation techniques only. As seen in the discussion in
Section 3, there are practical and cost considerations that make mitigation
techniques difficult to apply. This difficulty may be the result of technical
problemsr such as the inability of a site location to be changed; planning
problems, such as the difficulty associated with predicting the type and
magnitude of impacts; economic reasons—it may simply be cheaper to site now
and pay later; and uncertainty, since some risk will always remain—mitigation
is rarely "complete" for all impact issues.
Generally, there will be three major types of impacts that may emerge
from mitigation attempts that are potentially compensable impacts:
• Unavoidable impacts
• Intangible impacts
• Uncertainty impacts
Unavoidable impacts may include, for example, increased traffic in the vicinity
of the HWMF or the destruction of valued open space. Intangible impacts
refer to impacts that are difficult to measure, such as quality of life or
community stigma effects resulting from an HWMF. Uncertainty impacts involve
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tee impact issues where it is impossible to reliably predict whether an
fact, will occur. Rather than automatically mitigate these impacts (which
oe impossible to do anyway) two options are available: contingency-
•elated operation actions, such as monitoring and the development of emergency
-tsponse techniques discussed in Section 3.3; or contingency funds to compen-
sate for impacts when they do occur.
There are several potential types of compensation techniques applicable
9 HWMF siting issues .
• Monetary payments
• In-kind replacement of affected
resources/services
• Contingency funds
ttniJbit 6 illustrates example techniques for each of these major types. The
eections below describe the techniques and the issues associated with their
4.2 MONETARY PAYMENTS
Description
This technique involves a cash payment to a potentially affected individual,
group, or community. Beyond this basic definition, there are important dimen-
sions that differentiate the techniques: the method of the payment; the timing
Of the payment; the recipient of the payment; , and, of course, the provider.
Briefly, these dimensions define monetary payments as follows:
• Methods of Payment
This aspect refers to the form and basis for monetary payments.
Payments may be direct as in the case of a lump sum cash payment
for impacts negotiated by a provider and recipient. On the other
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EXHIBIT 6
EXAMPLE COMPENSATION TECHNIQUES
TECHNIQUE
APPROPRIATE FOR PRIVATE
DEVELOPER USE
APPROPRIATE FOR
STATE USE
PAYMENTS TO COMMUNITIES:
IB property tax payments
-a payments in lieu of taxes
o gross receipt taxes on facility
revenues
jo tipping fees
o tied impact payments
o special on-time lump sum payments
o adjustments to state-local aid
formulas
DIRECT MONETARY PAYMENTS: TO
AFFECTED INDIVIDUALS/GROUPS
o direct cash payments
o purchase of property at fair
market value
IN-KIND REPLACEMENT/RESTORATION
ACTIONS
Resources
o replacement or restoration of
property, vegetation, wetlands,
etc.
Services
o repaving access roads to HWMF
o provision of fixe truck for
emergencies
o replacement of municipal well
o training of local police and fire
departments
CONTINGENCY FUNDS
o surety bond
o liability insurance
o emergency response fund
o land value guarantees
o tax base loss payments
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
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hand, they may be based on some surrogate measure of impact
effects. Tipping fees based on hazardous waste amounts and gross
receipt taxes both illustrate this type of monetary payment.
Payments, particularly those from the States to a recipient, may
also be attached to other monetary transfer mechanisms. States,
for example, may factor in payments for HWMF impacts in a
community into traditional State-provided local aid mechanisms,
such as road improvement funds. These types of payments are
commonly referred to as "earmarked" payments.
• Timing of Payment
This aspect addresses the "when" dimension of monetary payments.
In terms of monetary payments, the key issue is often between
one-time and continuous payments. One-time payments may occur
upfront in anticipation of impact costs; or they may occur after
the HWMF has been operating for a while and its impact costs
are clearer. Payments based on waste received at a HWMF are
examples of continuous payments.
Because of the uncertainty of potential HWMF impact, communities
may want monetary payment schemes reviewed after a period of time.
A community may want a conversion provision included in the basic
agreement with the developer requiring a periodic review to
renegotiate the terms and conditions of the monetary payment
scheme. An example is contained in the model binding agreement
in Appendix E.
• Recipient/Provider
There are several combinations of providers and recipients
involving the State and the private developer as potential
providers, and communities, individuals, and groups as recipients.
The monetary payment transfer mechanism will vary depending on
the provider and recipient. Exhibit 7 illustrates the appro-
priateness of particular mechanisms for different combinations
of provider and recipient.
Examples
There are few actual examples to date of monetary compensation to either
communities or individuals by States or by developers in the siting of HWMFs.
In addition, some of the techniques listed in Exhibit 6 may not be completely
familiar to the reader. More detailed descriptions for some of these terms
follow:
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EXnJCBIT 7
MONETARY PAYMENT TECHNIQUES APPROPRIATE FOR
DIFFERENT PROVIDERS AND RECIPIENTS INVOLVING PRIVATE HWMF3
^S. RECIPIENT
^>w
PROVIDElN^
STATE
PRIVATE
DEVELOPER
COMMUNITIES
HOST
• Tied impact
payments
• Lump sum
payments
• state-local aid
adjustments
• Property tax
payments
• Payments in
lieu of taxes
• Facility taxes
• Tipping fees
• Tied impact
payments
• Lump sum
payments
ABUTTING
• Tied impact
payments
• Lump sum
payments
• State-local aid
adjustments
• Tied impact
payments
• Lump sum
payments
• Tipping fees
INDIVIDUALS
• Tied impact
payments
• Lump sum
payments
• Tied impact
payments
• Lump sum
payments
GROUPS
• Tied impact
payments
• Lump sum
payments
• Tied impact
payments
• Lump sum
payments
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• Property Tax Payments! "In terms of compensation, this technique
means paying taxes above that normally required for property of
comparable valueJor accelerating tax payments.
• Tipping Fees: The.se are fees that are levied on the facility
based on each unit of waste (truckload, pound, cubic yard,
gallon) accepted at the facility. They provide an on-going
source of compensation.
• Tied Impact Payments: These compensation payments are tied to
certain impact issues. States may "earmark" funds to communi-
ties so that they may only be used for certain activities.
Private developers can also earmark funds to communities through
their agreements with communities.
• Adjustments to State-local Aid Formulas; States have a variety
of specific categorized assistance programs to funnel aid to
communities. These can be adjusted and-used as a transfer
mechanism for monetary payments. In addition to these specific
programs, many States also provide general revenues to localities
based on population, local tax base assessments, etc.
• Purchase of Property at Fair Market Value; This is a pre-project
payment to a property owner for the pre-project fair market value
of his property. This is a method for compensating property
owners who fear property value impacts and wish to sell to avoid
losses. This method contrasts with the land value guarantee pay-
ments listed in Exhibit 6 and discussed below.
While there are few examples of the above techniques to date, two States
have passed legislation authorizing tipping fees as compensation to host commu-
nities. Kentucky and Connecticut require the developer to pay the host commu-
nity an amount based on the waste volume or revenues of the developer. For
example, the Kentucky legislation requires that HWMF developers pay 2% of their
gross receipts to the host county's General Fund. Connecticut's formula is
as follows:
• $.OS/gallon of hazardous waste received on a quarterly basis;
• Payment in accordance with the following table, whichever is
greater:
Payment as % of
Quarterly Gross Receipts Gross Receipts
Over Not Exceeding
0 $1,250,000 10%
$1,250,000 $2,500,000 5%
$2,500,000 2»j%
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Compensation in the form of monetary payments to communities to offset
the costs of specific impacts is extensively used in the development of energy
eilities. These compensable impacts are primarily related to socioeconomic
inpacts. A good example is the Washington Public Power Supply System's (WPPSS)
$12 million compensation for public facility and public service impacts pro-
jected to occur from its nuclear power plant construction activities. The
SPPSS negotiated agreements for this amount in the mid 1970s with 44 different
taxing districts. The State of Washington's Energy Facility Site Evaluation
Council served as a mediator during the negotiations.
Suitability
Monetary payments are generally best suited to measurable impacts in which
costs are definable. For example, if a community will need two additional
local health agents to monitor the HWMF, these costs are easily calculated
and can be compensated. HWMF impacts on community image and risk are not as
easily costed and less suitable for specific monetary payments. The Connecticut
jnd Kentucky waste-based tipping fees, however, illustrate the suitability of
nonetary payments for dealing with these intangible impact issues. Essentially
these approaches recognize the great difficulty in defining impacts and costs.
Thus, they simply imply that impacts are related to the amount of waste being
handled at a HWMF and use a waste-based formula. The host community then deals
trith the issue of distributing these revenues to compensate tangible and intan-
gible impacts.
On-going payments, such as tipping fees, will also obviously produce less
revenue for a community in landfill situations (which have a limited lifespan)
than incinerators, processing, or transfer facilities. However, if one assumes
that risk is related to years of operation, then continuing payments do not
"overcompensate" as such.
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aneral Issues
There are a number of general issues associated with the use of monetary
ments that States should consider whether they provide them directly or
require the private sector to use them:
• Monetary payments to an affected individual or community
provide the recipient with a great deal of flexibility.
They allow the recipient to decide how to deal with the
costs suffered from the HWMF. In this sense they are
easier to administer than other forms of compensation.
• While giving the recipient flexibility, monetary payments
are also more susceptible to accusations of buying off the
recipient. This is particularly possible if there is not
a clear connection between the impact cost, the payment,
and the disbursement of the payment to offset the impact
cost.
In addition to these issues, there are important considerations in using
different types of monetary payments:
v One-time Versus Continuing Costs; Certain payments, such
as tied impact payments and lump sum payments may be one-
time in nature, while tipping fees and property tax pay-
ments represent recurring costs. In looking at the economic
burden placed on a private sector developer, States should
examine the present value of the total impact response packages
being required of a developer. Similarly, if the State is
providing a package of impact responses, present value analysis
as illustrated in Section 2 should be done. This will allow
the economic burden of packages to be compared between each
other and between providers.
, Impact Responsiveness; The tipping fee and other recurring
payment schemes are more responsive to unpredicted impacts
that may occur after a HWMF is sited than the one-time up-
front monetary payments.
• Equity- Monetary payments directly provided to a community
n^y not filter down to residents affected most by HWMF impacts.
In that sense, tied impact payments are likely to be more
equitable. One-time, up-front payments tend to compensate
existing residents rather than migrants. Recurring payment
schemes, particularly ones that are adjustable, are more
equitable for existing residents and migrants to a community.
• Administrative Burden; Tipping fees and facility taxes are
administratively the easiest to negotiate, calculate, and
collect of all the payment schemes. The other schemes are
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likely to be more responsive to actual impact costs, but
require often difficult calculations and distribution schemes.
The above comments clearly indicate the tradeoffs between the difficult
jnetary approaches. In order to deal with these issues, a combination or
a mix of monetary payments is a useful approach for States to consider in
developing compensation schemes. See Exhibit 8 , for example.
State Provision Versus Private Developer Requirements
1h& above considerations are useful in selecting the form and type of
Monetary compensation. One of the first and most important issues that a state
vill want to address, however, is the provider question. Some general consid-
erations are provided below:
Should the State Be Involved in Directly
Providing Monetary Payments?
The following issues are relevant to this questions
• In private HWMF situations, exclusive State provision
of monetary payments may minimize the possiblity or
perception of illegal payoffs between the private
developer and a community. If the State supplements
developer-provided compensation with monetary payments,
it will probably help to legitimize the concept of com-
pensation.
• Exclusive State provision of monetary payments may also
be viewed either as:
- An effective incentive to both the developer
and the community to aid in the siting of
a HWMF;
- An unnecessary or undesirable subsidy of the private
sector;
- Interferring with the competiveness among HWMFs.
Obviously, these contrasting viewpoints will have to be
resolved on a state-by-State basis.
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OTC THE BiTJNU A PRIVATE HWMP
(Hypothetical Example)
RECIPIENT/ISSUE
DEVELOPER PROVIDED
STATE PROVIDED
TO HOST COMMUNITY
o quality of life impacts
tipping fee of 5$/gallon of disposal
waste—renegotiable every 2 years
o facility monitoring
annual tied impact payment based
on actual costs incurred
access road maintenance
annual adjustment on State-local
highway aid formula
TO NEIGHBORING COMMUNITY
o quality of life impacts
annual lump sum payment
TO RESIDENTS ABUTTING FACILITY
o property value impacts
quality of life
one-time lump sum payment of
$5,000/propery owner
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• Supplementing the above, any State provision of compensation
will help to relieve some of the economic burden on the
private developer. This may be critical in the successful
siting of a facility.
• Any state provision of monetary payments may help to
resolve differences between communities and the developer
and thus help to shorten the siting process.
• In those States with the ability to override local
zoning in HWMF siting, state provision of monetary payments
may be a political necessity to assuage community op-
position and to minimize community attempts to challenge
the constitutionality of the override provisions.
o Conversely, State compensation payments may be the only
way in those States with strong home rule laws that States
can get HWMFs sited.
Most of the above comments justify State provision of monetary payments.
ttere are, however, serious issues surrounding State monetary payments and
these include:
• Do States have the legal authority to provide monetary
compensation in situations where the facility is privately
owned? We do not believe that this is a problem at all
for States. See Appendix C.
9 State monetary payments may set a political precedent
for State compensation payments for other public and
private facilities. This concern has been voiced by a
number of States in a series of interviews with State hazard-
ous waste officials. One way to avoid this possibility
is through the use of special language in compensation
legislation that deals with the extraordinary circumstances
surrounding 1IWMF siting.
• State monetary payments raises the question of state
liability for problems that occur later with the facility.
This appears to be a moot issue with respect to private
HWMFs. See Appendix F.
• State compensation monetary payments may undermine the
credibility of the State regulating role in the sitinq
and operational review of HWMFs. This is a very compelling
argument and one that is of concern to many State hazardous
waste agencies. The fact that States would be providing
compensation to the communities rather than to the developers
minimizes, however, potential conflict of interest in State
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roles. There is also precedent for State aid to and regula-
tion of a particular party. For example, States subsidize
municipal wastewater treatment plants and the same State
agencies regulate them. States also provide a number of
subsidies, such as economic development loans to private
industry, and also regulate their activities. One pre-
caution that States could implement to minimize conflict of
interest charges is to have a state agency separate from
the regulating agency be responsible for the compensation'
activities.
State monetary payments, as well as those required of private
developers, may tend to promote the siting of HWMFs in
poorer communities. This in fact may occur but whether it
represents a social inequity that is of concern to the
State is for a particular State to decide.
Many States are constitutionally prohibited in making long-
term monetary or special privilege commitments. Thus, annual
payments would have to be legislatively enacted each year.
State provision of monetary payment may affect the dis-
tribution of hazardous waste disposal costs. As discussed
below, the method used by the State to finance compensation
will affect the distribution of costs. One of the concerns
here is that State compensation funded out of general
funds will act as a subsidy to out-of-state hazardous waste
generators who dispose in the HWMF associated with the
compensation. See Appendix B.
Should the State Require Private HWMF
Developers to Provide Monetary Payments
As mentioned, both Connecticut and Kentucky have recently passed
legislation requiring private HWMF developers to provide compensation to
communities on a formularized basis. Massachusetts has also passed legis-
lation requiring developer provided compensation, but has left the amount
to be negotiated between the developer and the community. There are
several concerns with this issue that States should consider before
developing developer provided requirements. First, on the positive side:
» State requirements for developer monetary payments will
tend to legitimize the compensation concept. Specific
state requirements in the amount of the payments, such
as those mandated in Connecticut and Kentucky, would
tend to mute the bribery and illegal payoff issues.
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0 Jtate requirements are also likely to standardize the
negotiation process and therefore provide some "ground
-.ales" to help speed up the siting process.
jevural States and some of the private HWMF developers are concerned
but Stdte requirements. The principal .issues of concern are the following:
• Specific monetary payment requirements may prove to be
an economic burden to developers. This may make a site
financially unfeasible or it may make a site more com-
petitive with other sites. This may further exacerbate
illegal dumping practices or stimulate disposal to
competing firms.
• should monetary payment requirements also be made retro-
active to existing HWMFs? This may be difficult to
legally do. If they are not, however, existing sites
will have a competitive advantage over new sites.
• Specific monetary payment requirements may make it dif-
dicult for HWMFs to obtain private capital financing.
Specific formula approaches are, in effect, on-going
liens on a developer's HWMF revenues. This may inhibit
the developer's ability to obtain private financing.
IN-KIND REPLACEMENT/KESTORATION ACTIONS
Description
Instead of providing a monetary payment to a community or an affected
party, the provider in this technique offsets impact costs by replacing the
affected resource or service.
Examples
This technique is widely used in the siting of energy facilities. The
Tennessee Valley Authority (TVA) uses this technique in the siting of its
nuclear and coal-fired power plants. For example, in the mid 70's TVA nego-
tiated a very complex compensation agreement with several communities, the
State of Tennessee, and the Nuclear Regulatory Commission for the construction
of H nuclear facility in Hartsville, Tennessee. Among the things agreed to
.59
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T/A was to construct necessary traffic improvements and education facilities.
*
n addition, they agreed to provide TVA expertise to supplement local officials
,-,al with housing and planning impact issues.
Potential examples in HWMF siting include the following:
Resources
• Replacement of restoration of property, vegetation, wetlands,
valued open space affected by the HWMF
Services
• Repaving of access roads to a HWMF
• Reconstruction of transportation route to a HWMF
• Replacement of municipal water supply wells
• Provision of fire truck to the host community for emergencies
o Training of local police and fire personnel in hazardous waste
emergency response
Suitability
This technique is most appropriate for those impact issues that a developer
or the State is able to directly provide an in-kind response. For a private
developer, this ability may be limited. The fire truck response is a good
example of what a developer can provide. A variation on this technique is the
joint use of a service or facility, such as a fire truck. Wes-Con, for example,
in Idaho has made available its fire truck to the host community for dealing
with off-site hazardous waste emergencies.
In general, the HWMF developer will be most able to provide limited
nonconstruction-related items, such as fire trucks, training, and property.
The State, on the other hand is better able to provide items involving con-
struction.
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In-kind replacement actions are less able to deal with intangible issues,
as quality of life and community stigma problems. The mere presence of
,,e H'}JMF in a community may raise the community image problem. There is very
little a developer can do to directly compensate for this issue using in-kind
replacements.
General Issues
The major advantage of using in-kind compensation techniques is their
ability to directly deal with specific impact issues. Unlike monetary pay-
ments to communities that may never reach impacted individuals, these tech-
niques directly offset costs and impacts associated with a HWMF. Secondly,
they are particularly appropriate in muting bribery or payoff criticisms
associated with the use of monetary compensation. This is a major advantage
in overcoming public opposition to a HWMF.
In terms of other issues, there are several:
• The developer or the State may not be able to provide some
of the in-kind services and resources shown in the examples;
it may be a lot easier to simply pay the host community money.
• The host community may not want the provider involved in re-
placing resources or services} communities may wish to handle
these functions by-themselves.
« Similarly, an affected resident may also rather receive straight
monetary payments rather than some comparably valued resource.
• A key concern is the issue of one-tiae replacement versus on-going
replacement. Some of the in-kind services and resources lend
themselves to one-time compensation, such as the replacement of
land needed for the HWMF. Other service impacts of the HWMF may
be recurring. If the compensation agreement reached with
the community covers these types of impacts, then the compen-
sation provider may be involved in long-term on-going cost
commitments.
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ate Pr -vision Versus Private Sector Requirement
Sta^e-provided in-kind compensation measures are appropriate obviously
tat»-owned facilities. The extent to which the State wants to provide
hem in private sector HWMF situations will depend on the following types of
onside rations.
• Whether the State is interested in using State-provided
compensation as a means of subsidizing the private HWMF
developer;
• whether the State is in a better position to provide the
in-kind compensation more cheaply or more quickly than the
private sector;
• Whether the Stae provision will help to resolve stumbling
blocks in the negotiation between the developing community
and then speed up the siting process;
• whether the State in-kind compensation is viewed as a poli-
tical precedent problem in terms of compensating other
communities for nuisance facilities or in terms of subsi-
dizing other private sector development activities;
• The extent to which out-of-state wastes are accepted at
the HWMF and whether the State is willing to use compen-
sation in light of its likely subsidy of out-of-state
wastes.
In terms of requiring the private sector to directly provide in-kind
services, the concerns raised in the discussion of monetary payments apply
here as well. The principal concern is the economic burden placed on the
developer and, in turn, the impact of this burden on the developer's ability
to obtain private financing for the facility.
In general, the State requirements on developers for in-kind services
should be done with great care. The developer is usually more able to provide
monetary compensation rather than specific services. One State, Massachusetts,
has developed compensation legislation that allows the community and the
developer to negotiate which in-kind services the developer will provide.
The state, through a hazardous waste siting council, reviews the developer-
•rom-vanity agreement and may recommend additional adjustments.
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4 CONTINGENCY FUNDS: UNEXPECTED EVENTS
Thi.; technique involves a promise to pay for impact issues that cannot be
liably predicted or that cannot be mitigated. As discussed previously, risk
'11 -alv -iys remain in a HWMF area.
Thi^ compensation technique is closely related to the mitigation activities,
ch as monitoring and emergency response activities , that attempt to prevent or
educe impacts from occurring. Recognizing that operational activities are not
ikely ^o completely minimize risk, this technique ensures that contingency
vments would be forthcoming. Contingency funds provide communities with the
issurance that should an adverse event occur, the resources are available to
;ompensate for adverse impacts.
This section discusses techniques appropriate for unexpected events. For
the purposes of this handbook, contingency arrangements for property value im-
ts are discussed separately in the next section because of the paramount
importance of this issue in HWMF siting.
Examples and Suitability
Contingency funds can vary along several parameters: funding procedures,
events covered, and impacts covered. Funding for contingency funds can come
from the State or the private sector, additionally, there is a time variation
-one-time, as needed, continuing. For example, the State can appropriate one
lump sum from its general fund or appropriate an incremental amount annually.
Alternatively, States could have bond issues on a one-time only or periodic
basis. Finally, they could tax hazardous waste generators, transporters, or
facility operators.
The facility owner could also make a lump sum payment prior to opening the
facility; purchase additional liability insurance beyond the minimum permit
63
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icements; pay into a State-operated fund on a waste processed basis; reim-
jf the fund on a dollar-for-dollar basis for expenditures related to the
?• or a combination of the above.
Several States—Michigan, New Jersey, Wisconsin, Delaware—require HWMFs
pny a certain amount per gallon of waste handled into contingency funds.
sas, on the other hand, requires HWMFs to make one lump sum up-front payment.
a.- requires a surety bond and a tonnage fee. Other States, like New Jersey,
rer the fee once the fund reaches a certain level, but requires any HWMFs that
ise a problem to reimburse the fund.
The funds can cover a range of possible events and incidents:
• transportation-related spills, or accidents
• incidents at the facility (explosions, accidental releases)
• failure of mitigation measures (lining ruptures)
• monitoring
• post closure accidents
Finally, the funds can address a number of potential impacts to either
idividuals, corporations, or communities. These could include
• property damages
• health damages
• natural resource damages
• economic damages (such as loss of work, loss of business)
• temporary or permanent relocation costs
* costs of incident management and control
• costs of long-term monitoring
New Jersey, for example, uses this fund to provide compensation to individ-
aaJs, communities, and businesses for real and personal property damages, clean-
up -osts, health bills, lost income due to ill health, and loss of business.
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Other State generally authorize more limited use of the funds.
General Issues
The major advantage of contingency funds is that they deal with risk.
It is impossible to accurately predict all possible adverse impacts in advance
of HWMF operation. Furthermore, no mitigation measure is 100% effective:
accidents will occur and control technologies fail. Contingency funds address
these problems and provide a means to compensate for the impact and the long-
term adverse effects of incidents.
However, there are certain problems associated with the funds. The most
serious is, obviously, cost. Tipping fees could affect the HWMF's continuing
economic viability, while lump sum up-front payments could impact the feasi-
bility of constructing the HWMF in the first place. Furthermore, there is the
opportunity cost of tying up money in a contingency fund. If the fund is
supported by State money, this money is lost to other State programs. If the
HWMF provides the contingency money, its developer is prevented from spending
_he funds on other compensation measures or other economic ventures. Clearly,
the more types of incidents and the more adverse impacts the fund covers, the
greater the potential expenses and replenishment frequency.
An additional issue related to the design of such a fund is disbursement.
Such funds require a mechanism for determining when the situation warrants
expenditures from the fund, and what those expenditures should be. This is
a potential area for State involvement.
State Provision Versus Private Sector Requirement
State requirement on the private sector for surety bonds and liability
insurance are well-established and will be necessary for all HWMFs. RCRA
mandates that operators put up surety bonds and obtain liability insurance.
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Surety bonds, to ensure coverage of closure costs, can be canceled, however,
;and liability insurance mandated by the Federal government of $1 million/
urrence/firm and $2 million annual aggregate might be exceeded in the event
of a major catastrophe. States, therefore, must insure that cancellation
provisions in a surety bond contain a 90 day notice provision.
States can also supplement the private sector's contingency fund coverage
with its own emergency response fund as discussed above. There is some precedent
for State and public sector participation in this area—catastrophic health in-
surance and crime victim compensation are two examples. The key dilemma faced
by States is the cost burden placed on the HWMF developer versus incident and
impact coverage desired.
4.5 CONTINGENCY FUNDS: PROPERTY VALUE IMPACTS
Description
While empirical evidence is fragmentary and often conflicting, a nuisance
facility, such as a HWMF, is likely to stimulate some degree of property value
loss in a certain area around a HWMF. Such impacts are also possible, to a
lesser extent, along routes heavily travelled by waste haul vehicles. Changes
in property values reflect many of the other impacts raised in this handbook--
noise, traffic, risk, odors. As these first order impacts are unlikely to be
completely mitigated, some types of contingency fund is likely to be a common
compensation need in HWMF siting.
A corollary impact to property value effects suffered by individuals and
corporations is the tax base loss resulting in a community. Decreased property
values mean lower tax receipts and revenues for a community. This section
discusses alternative ways for compensating property value and tax base losses.
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Compensation Program Considerations^
Before discussing alternatives, 'two important questions require some con-
<
«•-
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price figures provides perverse .incentives to local homeowners: the policy
might contribute to community disruption.
Besides these valuation considerations, there is the key issue of eligi-
bility. Is everyone in the host community eligible? Certainly, this would
prove to be an unmanageable compensation situation. Property value compensa-
tion techniques require limits on eligibility—both spatially and temporally.
Alternatives and Issues
There are two basic means for dealing with property value losses: purchase
of the affected property at a fair market value plus compensation price; or
some method of cash compensation to reflect the appraised property value loss.
The first alternative involves either the HWMF developer or the State in the
property acquisition business. This is a major drawback and because of the
numerous issues involved in such an approach it is not considered in this hand-
book.
There are several issues and variations associated with the second alter-
ative: percent of loss to be compensated; trigger mechanism? time limit on
compensation period; eligibility of new versus existing property owners. Each
of these issues is discussed:
• amount of compensation; A full 100% compensation suffers from
economic efficiency problems. In particular, if property owners
were assured of 100% compensation, they would have no incentive
to search for the highest-bidding customer for their home. Some
fixed percent, such as 80%, may have to be considered.
• Trigger Mechanism; Should compensation be triggered by a decision
to sell? If a property owner in the eligible area decides to sell
his or her home, the developer or the State could pay a fixed
percent of the difference between the pre-project assessed fair
market value of the home, and the subsequent sales price, adjusted
for property inflation. Should the property owner decided not to
sell, compensation is still available. In this case, the provider
would pay a fixed percent of the difference between the pre-project
appraised fair market value of the home, and a second adjusted
appraised value taken after the facility is in operation.
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• Compensation Period; Compensation should probably be paid only
once, after the facility is in operation, but before a certain
_set period has elapsed. The single compensation payment re-
duces administrative load and avoids double-counting. The
requirement that compensation payments be delayed after the
facility is in operation would avoid the payment of short-term'
property value losses generated by construction impacts. Finally,
a time limit on compensation claims (e.g., 5 years) would reduce
administrative load and minimize problems of calculating land
inflation over long periods.
• Eligible Property Owners; Che approach would compensate only
those individuals who owned impacted property prior to the
introduction of the HWMF. Once a facility is introduced into
an area, property values will adjust to reflect the impact of
that facility; thus, individuals who purchase homes in the
impacted area after the facility is introduced will already
have been implicitly compensated by the .market through the
reduction in the price they must pay for that home. In short,
if an individual with full knowledge chooses to purchase a
home next to a HWMF, the State or a HWMF developer should
probably not be obligated to compensate that individual for
having made that choice. Eligibility will also require
definition in terms of spatial considerations. Alternative
criteria, all imperfect in some respect, would include:
geography, topography, arbitrary distance, transportation
routes, or some negotiated test of "interest".
Tax Base Loss Impacts
Accompanying individual property value losses are tax base losses to a
community. The approach that is used to compensate a community for the loss
must be keyed to some of the issues raised in property value compensations,
namely: impact area and compensation period. Before a community can attri-
bute tax base losses to a HWMF, an eligible impact area and an eligible period
for compensation would require definition. The tax base loss issue, however,
is also complicated by offsetting tax base gains in a community due to a HWMF.
Tax base gains? It is not improbable that the presence of a HWMF would stim-
ulate industry to locate in a community; or minimize the loss of some existing
industries. Attributing tax base losses to HWMFs appears to be highly question-
able. Consequently, contingency arrangements do not seem to be a high priority.
Rather, such impacts if they do occur, would probably be best handled in a lump
sum type of cash payment.
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State Provision Versus Private Sector Requirement
There is considerable experience with after-the-fact land value compensa-
tion in facility siting, particularly transportation facilities. In these
situations, the Federal and State governments have provided compensation without
resorting to owner-initiated court suits. There is also a substantial body of
case law for property value compensation due to nuisances. (See, for example,
D. Hagman and D. Miscyznski, Windfalls for Wipeouts, American Society of Plan-
ning Officials, 1978) The research for this handbook, however, has uncovered
very limited experience with property value compensation in the fora of pre-
project contingency arrangements. During considerations for moving the capital
of Alaska from Juneau, legislation was passed in the Alaska legislature authori-
zing the State to purchase property at a fixed percentage of present value if
property owners were not able to sell their houses within a certain period of
time. In Montgomery County, Maryland, the developer of the White Flint Mall
offered to abutting property owners a property value compensation guarantee.
The developer hired an appraiser to appraise the pre-Mall values of the ap-
proximately ten properties. According to the agreement signed by the developer
and the land owners, if property owners wnated to sell their property within 5
years, and the price offered fell below the pre-project appraised value, then
the developer would: 1) pay the difference; or 2) buy the property. It is un-
likely that the compensation guarantee will have to be exercised. Property
values have, in fact, increased due to the popularity of the Mall.
While the Mall example is not entirely analogous to HWMT siting, one
lesson learned from the Mall experience is useful: property value compensa-
tion guarantees are import*nt chips in facility siting negotiations. Proper-
ty value concerns are likely to be paramount issues in HWMF siting. Some pro-
visions appear justifiable. While States can and have resorted to after-the-fact
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property value compensation, the constitutional difficulties faced in many States
co? earning long-term commitments appears to preclude a lead role for the States
in directly providing through State financing a contingency fund. Consequently,
the private developer, at least from a logistical viewpoint, is best suited
to provide for contingency arrangements. The economic burden is likely to be
minimal, particularly if the compensation period is defined as a short-term
period as suggested above. State or host community involvement, however, is
warranted for defining impact areas and providing oversight in the appraisal
process.
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SECTION 5
INCENTIVE TECHNIQUES
.1 INTRODUCTION
Unlike mitigation or compensation techniques which attempt to address
losts or impacts incurred in the siting of a HWMF, incentives may not be
specifically directed at HWMF impacts. Incentives represent additional pay-
tents in the siting process. They attempt to provide benefits above and beyond
the impacts associated with a HWMF. As mentioned in Section 1, the rationale
Eor incentives is primarily goodwill and strategic in nature. There is obvi-
ously a fine definitional line between compensation and incentives. Impact-
related techniques refer to measure that address specific HWMF impact issues,
Put are in addition to whatever compensation or mitigation techniques used to
address the impact issues. The ability to define incentives as impact-related
techniques depends on site specific impacts as seen in Exhibit 9 . The
examples shown in Exhibit 9 are representative examples. There are undoubtedly
additional variations on donation recipients or on the types of additional
public services/amenities that could be provided in a particular community.
There has been a moderate number of examples involving the use or offering
of incentives in the siting of HWMFs. For example, Wes-Con, Inc. used several
incentives in the siting and operation of a hazardous waste disposal facility
in an abandoned missile silo complex in Grandview, Idaho. The site is over
I0v> acres in size. Wes-Con offered several incentives to the local area, including:
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EXHIBIT 9
EXAMPLE INCENTIVES
TYPE
Provision of jobs
to local area
residents
Free Disposal or
preferential rates
to local business
and the community
Additional public
services and
amenities
o fire truck
•3 ambulance
parks ,
recreation areas
o road improvements
o etc.
Additional risk manage-
ment activities:
o independent
monitoring and
inspections
o emergency res-
ponse procedure
Additional monetary
payments to the host
community
o additional taxes
o additional tipping
fees
GENERALLY
UNRELATED
TO
HWMF
X
'
X
.
MAY BE
RELATED OR.
UNRELATED TO
HWMF IMPACTS
X
X
APPROPRIATE
FOR PRIVATE
PROVISION
X
X
X
X
x
APPROPRIATE
FOR
STATE PROVISION
X
X
x
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EXHIBIT 9 (Cont'd)
EXAMPLE INCENTIVES
TYPE
inup of existing
iandonad hazardous
ste facility
tions to local
ari table organi-
tions
an tees or backing
municipal bonds
jhase 3f municipal
l>nds at rates more
>"orable to the
, Lity than pre-
.ing market rates
GENERALLY
UNRELATED
TO
HWMF
X
MAY BE
BELATED OK
UNRELATED TO
HWMF IMPACTS
X
APPROPRIATE
FOR PRIVATE
PROVISION
X
X
X
X
APPROPRIATE
FOR
STATE PROVISION
X
X
X
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use of Wes-Con's firefighting equipment, (the area is rural and has no existing
equipment); the use of its first aid equipment; and the use of its well water
local cattlemen. The county and the area cattlemen, however, have not used
any cf these offers since the Grandview site began, operations in 1973.
We s-Con also received permission to site a hazardous waste disposal faci-
lity in 1977 in a nearby missile silo complex in Bruneau, Idaho. It has not
yet developed this site as a HWMF and is contemplating alternative uses for
the site. The success in getting approval for the Bruneau site, however, is
attributable, in part, to Wes-Con's successful use of incentives at its Grand-
view site. During the operation of its Grandview site, Wes-Con has made dona-
tions to local charities and recreation events (total * $15,000) and has pro-
vided free pesticide disposal service to area farmers. The free dispoal service
is estimated to be equivalent to $5,000/year. In addition, Wes-Con has made an
effort to hire its employees locally; provided emergency disposal service during
atural disasters; and volunteered the use of its heavy equipment to local resi-
dents .
The use of incentives to promote goodwill has also been evident in other
HWMF sites. Chemical Waste Management, Inc., which operates a disposal facility
in Livingston, Alabama, donated an ambulance to the community. Kansas Industrial
Environmental Services (KIES) which operates a land disposal facility for haz-
ardous wastes in Furley, Kansas, supplements local snow plowing efforts with
its own equipment.
There have also been offers of incentives in unsuccessful HWMF siting
situations. Allied Chemical, Inc. for example, sought to locate a secure land-
fill in nearby Rossville, Maryland to dispose chromium waste from its manufac-
turing operations in Baltimore. The siting attempt, which generated consider-
able opposition and eventual rejection, was marked by Allied's offer to donate
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0 acres of its 60 acre site for use as a local park.
5.2 SUITABILITY
l.i HWMF siting situations when the provider has responsively addressed
impact, issues, incentives nay be.appropriate given the following considerations:
« As a means for showing commitment in addressing Impact issues,
the use of incentives may be appropriate. Thus, if the loss
of open space for the HKMP is an issue, then providing parkland
above and beyond what was lost would be an incentive that might
help to overcome opposition.
9 The use of incentives that are unrelated to impact issues has
to be done carefully. These types of incentives should be
based on a careful assessment of needs in a community. An
offer to donate land for a park may have no strategic or good-
will clout if the area has adeguate recreation resources. An
offer to accept local industry wastes for free, however, may
be done for little cost to the developer and have tremendous
political and economic value in a community where local indus-
try is having a difficult or expensive tine disposing of its
hazardous waste. Similarly, a rural area with few public
amenities or services is more apt to positively respond to
such incentives as donated ambulances, fire trucks, or recrea-
tion facilities.
• The Wes-Con, Inc. example also illustrates the value of using
incentives during the operation of a facility. The goodwill
that accounts to these incentives is an important factor in
keeping a HWMF in business.
The most important consideration in the use of incentives is their poten-
tial to backfire, i.e., to be counterproductive in addressing public concerns
in the siting of HWMFs. Research conducted for this handbook with HWMF firms
revealed a sensitivity to this issue. Some State hazardous waste officials
also view incentives that are totally unrelated to HWMF impact issues as border-
ing on bribery. In short, incentives that are non-responsive to impact issues
that remain unaddressed can be potentially dangerous. They can jeopardize or
nullify well-intentioned efforts to deal with public concerns. There is a
grea-er likelihood that incentives will be accepted if the community or poten-
tial recipient raises the notion first.
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While the backfiring issue is a clear-cut risk associated with the use
of incentives, incentive costs are-variable. Unlike mitigation or compensation,
ere Htate or local regulations or the severity of the impact may dictate the
amount and form of compensation, the use of incentives operates more on a free
auurket basis. The HWMF developer or the State has considerable flexibility
in using incentives. A provider must essentially make a judgement on what the
siting market requires in terms of the type and amount of incentive. How much
should the provider pay in incentives? It is not possible to answer that ques-
tion here, but two factors should be considered:
• Long term monetary payments to the community (tied to the amount
of waste being disposed) that are above and beyond compensation
requirements are relatively more expensive than one-time or ad-
hoc incentives such as the donation of public amenities.
• In-kind services will generally be the least expensive incen-
tives (and may have just as much strategic value). These
include free disposal service to local industries and the
sharing of HWMF facilities and equipment (e.g., fire trucks).
5.3 STATE PROVISION VERSUS PRIVATE SECTOR REQUIREMENTS
It is generally inappropriate for the State to require a private developer
to provide benefits above and beyond what is required to deal with actual im-
pacts. While the State has wide latitude in what it can require of a private
»
developer (see Appendix A) incentive requirements are not likely to be favor-
ably received by a developer who has carefully provided an adequate compensation
package. Surveys with private developers conducted for this handbook indicate
that they do not see incentive requirements as an appropriate State role. They
feel that incentives are basically a concern of the developer and the community.
The private sector is not opposed to State use of incentives to supplement the
private developers incentives. As seen in Exhibit 9 , there are a number of
opportunities for the State to potentially use in HWMF siting. State provision
should be done with caution since these are more discretionary actions than
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mitigation or compensation activities. Thus, the public nay not view them
as beinr; legitimate State activities.
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APPENDIX A: POWER TO IMPOSE IMPACT RESPONSE REQUIREMENTS ON A HWMP DEVELOPER
In the absence of a statutory provision expressly limiting
such power, an agency or board, authorized by State law to issue
permits for siting hazardous waste management facilities (HWMF),
may impose certain conditions on its approval of applications for
such permits. Among these nay be a requirement to compensate
the community or individual property owners for the losses they
will suffer as a result of the facility's location.
Nearly every type of governmental action relating to land
use regulation or facility siting approval has been made subject
to conditions at one tim^ or another, and such conditions have
1
generally been sanctioned in the courts. Typically, such con-
ditions are imposed in order to protect those interests that
have been placed within the anfcit of the permitting agency or
board. The board may determine that such conditions are needed
in order to protect the interests it has been charged with pre-
V
serving. It will thus work out with the developer the specific
measures that must be undertaken or promised prior to permit
issuance. Only after the conditions have been met will the
authority issue the permit.
Conditional permits are likely to be issued - and to be
judicially approved - whenever the permitting authority is given
discretion as to whether to approve or disapprove a particular
2
permit application. In general, the rule that has been applied
in the courts to evaluate the propriety of particular conditions on
site approvals has been that the condition imposed must bear a
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"reasonable relation" to the purposes and intent of the enabling
3
enactment. There does not appear to be any generic limitation on
the types of conditions that may be imposed, as long as this
reasonableness criterion is met. Thus, for example, if one pur-
pose of HWMF siting legislation is to protect the interests of
communities in which a facility is ot be located or those of
abutting property owners, any condition reasonably designed to
serve such purposes will likely be sanctioned. A condition requir-
ing that compensation be paid appears to fall within this rule.
Indeed, courts have approved "required dedications" of land
and money to compensate for the adverse consequences of a. devel-
4
opment when they were made conditions of permit issuance. The
only limits that have been placed on such requirements is that the
funds or other property demanded must be intended for a purpose
related to the use to which the property will be put, and must
not be so great as to be regarded as unreasonably onerous, in
light of that use. Thus, as long as compensation requirements
are limited to payments that approximate the likely damages that
will be caused by the facility, they should be legally permitted.
In formulating compensation requirements as conditions for
site approval, permitting authorities should take care to
measure the required compensation according to the magnitude
of the harm. This may be extremely difficult, if not arbitrary,
however, in dealing with the intangible impacts.
The fact that permitting authorities have considerable lati-
tude in formulating compensation requirements does not mean that
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their discretion is unfettered, however. Rather, their powers
are limited by principles of due process and equal protection,
as well as by the provisions of any state administrative proced-
ure act that applies. A board's actions may thus be subject
to challenge, for example, if compensation conditions are imposed
in some instances and not in others, unless there is some rational
explanation of this difference.
In the absence of discrimination or specific arbitrary and
capricious conditions that, violate constitutional or administrative
law principles, however, a HWMF permitting authority may feel
free to impose conditions requiring payment of compensation in
proportion to the damages expected actually to be imposed by
the facility.
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APPENDIX B: INTERSTATE ISSUES AND AGREEMENTS
Variations in compensation policies among neighboring States can have
undesired impacts on a HWMF's economic viability, and the flow of hazardous
wastes into the State. Because of these potential problems, States may want
to develop interstate agreements on compensation strategies. There are poten-
tial adverse effects whether the State, or the facility bears the cost of
compensation. In instances where the facility pays compensation, these ex-
penses will incrase the facility's operating costs. Therefore, any HV7MF that
provides compensation is likely to either charge higher rates or be less profit-
able than a facility that does not face these expenses. If a Hwr-iF charges
higher rates, generators will pre*fer to use other facilities in the area.
If a HWMF is less profitable, it is a less viable investment. These factors
could either keep facilities from being built in the first place, or ultimately
force compensation-providing facilities out of business.
If, on the other hand, the State bears the cost of compensation while
another nearby State requires the facility to bear this burden, the situation
is reversed. Here, the rates at the HWMF in the State that provides the
compensation will be lower which nay attract wastes into the State. This has
the undesirable side effect of increasing the risk of transportation related
accidents, wear and tear on the transportation routes, and may be bad public
relations for the State. Furthermore, the more wastes handled at the facility,
the greater the expense to the State of providing compensation.
Because of these potential problems. States may want to resolve policy
differences through formal or informal interstate agreements. They would have
two main options:
e jointly agree on compensation requirements; or
• agree on locations for common facilities and jointly provide
compensation.
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Jointly agreeing on compensation requirements might be difficult. Given
the site specific nature of compensation needs, given regulatory differences
amoving States and given differing political contexts, identifying an appropriate
common level of compensation, and implementing it might be complicated. But
even some minimum agreement, for example, requiring HWMFs in the States involved
to provide some minimum compensation, or simply agreeing that the States will
provide the compensation themselves would alleviate some of the potential pro-
blem. Furthermore, these could be agreed upon informally without establishing
official institutions or memoranda of understanding.
Should States agree to have common HWMFs and provide the compensation
jointly, they would face endless options. For example, tne States could
pay lump sums into a common fund, or pay on a tonnage shipped basis, or they
could develop common generation taxes and pool these in a compensation fund.
They also could agree to provide various mitigation measures such as:
• shared maintenance of transportation routes;
• shared emergency preparedness/response;
• shared monitoring;
• shared laboratory facilities/technology transfer;
• transfer stations.
These arrangements could be made through separate memoranda of understand-
ing among State agencies, through established regional commissions such as
the New England Regional Commission or the Delaware River Valley Planning
Commission, or through special newly developed hazardous waste commissions.
The Resource Recovery and Conservation Act expressly allows for interstate
agreements and organizations for hazardous waste management. While a detailed
description of potential interstate arrangements is beyond the scope of this
handbook, Appendix F of Arthur D. Little's report to the Hazardous Waste
Management Program of the New England Regional Commission, "A Plan for Develop-
nent of Hazardous Waste Management Facilities in the New England Region",
includes such a discussion.
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APPENDIX C: POWER OF A STATE TO PROVIDE IMPACT RESPONSES
The power to tax and spend in the public interest is a
6
fundamental "attribute of sovereignty" possessed by every
state. Under this power, states are free to determine what
goods and services they will provide and how they will be
financed.
An incentive or compensation payment may take: either of
two forms: (1) It may be an explicit grant of funds or other
value to those who are affected or are expected to be affected
adversely by a hazardous waste management facility; or (2) it
may, in effect, be a contractual purchase of a "package" of goods
and services from the parties who receive the payment. The. pack-
age may include affirmative cooperation in siting a hazardous
waste management facility (HWMF); it may include promises to
forego legal avenues to challenge the siting; or it may include
other similar elements.
The effects of either type of payment are likely to be the
same. In both cases, the availability of compensation or similar
cash payment may serve to reduce opposition to a HWMF. If opposi-
tion is reduced, the public may benefit because a needed facility
can be developed more readily, keeping disposal and product prices down.
A State is free to make the judgment that the public interest is
thereby served.
Onca it is determined that the public will benefit from
such community cooperation in the HWMF siting process, or prom-
ises to forego legal rights to intervene in opposition to the
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exercise their police powers in certain ways in the future. If
such a promise is the only quid pro quo for a State's payment
of compensation, the state has received nothing in return for
its expenditures, and it is possible to assert that the payment
is therefore not in the public interest.
The short answer to this objection is that the State's spend-
ing power is not limited to situations where the state itself
receives a benefit in return. Countless public expenditures
are made more or less as pure grants, without evan a semblance
of quid pro quo. The true test of State power is not whether
the State will benefit from the expenditure, but whether the
public interest is served.
This short answer however, ignores the fact that, if the
state has secured only an unenforceable promise in exchange for
its expenditure, the public has also received no benefit from
the transaction. Moreover, unlike welfare payments where the
simple transfer of funds is regarded as a public benefit be-
cause it serves the objective of equitable wealth distribution,
payments to local governments where HWMF are proposed do not by
themselves serve the public interest. The only way to assure
that the public interest is served by incentive payments to
local government—and thereby to remove all doubt as to their
validity — is to structure such arrangements so that, the; payments
are not made until after the bargained-for action is complete.
Nevertheless, the determination of where the public interest
lies is normally left to the executive and legislative branches
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of government. Courts will normally not interfere with a determin-
ation that a public purpose is served by an expenditure. Thus
while it may be impossible to assure that every compensation or
incentive payment in fact advances the public interest, a State
determination that it will is all that is required in order to
bring the payment within the scope of the state's power.
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-APPENDIX D: ALTERNATIVE LEGISLATIVE APPROACHES
( Available in final handbook)
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APPENDIX E-l
APPENDIX E-l
Model Compensation Agreement Between the
Town of Riverdale
•and Waste Management, Inc.
Introduction
The model agreement sets forth a number of provisions for
mitigation, compensation, and incentives to the "Town of River-
dale" for the potential and certain impacts of a hazardous
waste management facility (HWMF) to be constructed and operated
by "Waste Management, Inc."
The major legal problem associated with agreements of this
type is securing proper "consideration" from the governmental
signatory so that the agreement is binding and enforceable. Con-
sideration is what each party to a contract does, promises, or
forgoes in exchange for the actions, promises, or forbearance
of the other party. A contract is not enforceable unless con-
sideration has been given by each party for the obligations
undertaken by the other. In the model agreement, many promises
are aade by Waste Management, Inc. Therefore, care must be taken
that the Town of Riverdale gives consideration for all of these
promises.
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In a contract such as the model agreement, the necessary
consideration might conceivably take the form of a promise to
accept the HWMF or not to oppose it. Note that no such promise
appears in this agreement. Even if one did appear, it might be
null and void because it exceeded the Town's power, since a
Town ordinarily may not contract away its right and duty to
serve the public interest.
Alternatively, the contract might include a promise to
forego any legal remedies that may be available against the
owner to obtain damages for the adverse impacts of the HV7MF.
That promise is also not made in the model agreement (and
indeed is explicitly rejected in the proviso of paragraph
I.V.A., since few towns would likely be willing to agree to
it.
Another alternative would be for the agreement to recite
all of the harms possibly to be suffered by the Town and to
state that the site owner's promises are to compensate for
those harms. This approach was not taken for two reasons:
(1) In reality, it would be merely another form of a promise
of forbearance such as is rejected in paragraph I.V.A. (2)
Since many of the impacts recited would not be actionable in
court (for example, because they would not render the facility
a nuisance), a promise to forego legal action might be
"illusory" and thus not proper consideration.
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A fourth alternative is to tie certain promises to certain
harms and thereby to trade forbearance from action for those
harms only for the compensation agreed to. This approach is
escplicitly taken in paragraph IA. However, this is only a
partial solution, and the model agreement emphasizes this
fact by reciting a list of harms in the preamble much longer
than those to be compensated under paragraph IA.
The alternative selected, therefore, was to make the en-
tire agreement contingent upon some action by the Town, rather
than any promise. That action is the passage of a resolution
supporting the site owner's application, but it could as well
be a resolution approving the site, if such a resolution were
part of the necessary regulatory procedure. Thus, paragraph
V.A. makes the compensation agreement a "unilateral" contract
which does not go into effect until one side—the Town—has
completed its obligation under it. If the Town does not pass
the necessary resolution, the contract is not effective. If
it does, that action is adequate consideration for all the
promises made by Waste Management, Inc.
Sections I, II, and III of the model agreement contain a
few examples of compensation, mitigation, and incentives that
can be included in the agreement. Many more examples, of
course, could be devised.
91
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•I- Cash Compensation and Fees
Paragraph A. of this section contains conventional tied-
impact payments for the capital expenses and start-up costs
of servicing the HWMF. Paragraph B. sets up a tipping fee and
allows it to be renegotiated from time to time.
II- Provision of Services and Other Compensation
As an incentive, paragraph A. promises free disposal ser-
vices to the Town or its designee. Paragraph B. promises to
dedicate a recreational facility to the Town. This promise
may be regarded as a compensation device, if there will be some
loss of recreation in the Town as a result of the HWMF, or it
may be regarded as an incentive otherwise. Note that the pre-
amble says nothing about lost public facilities as an impact of
the HWMF. Such a reference could, of course, be incorporated
if it were needed.
III. Conditions of Construction and Operation
Paragraph A. provides for liability insurance, in the event
of third party damage. Paragraph B. includes some mitigation
measures that will alter the operation of the HWMF.
IV. Additional Compensation in the Event of Breach
This provision could be completely removed from the agree-
ment without affecting the substantive obligations under it.
92
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section is purely procedural and establishes a mediation and
arbitration procedure for handling breaches of contract conditions.
If this provision were omitted, such breaches would have to be
litigated in court:. In either event, however, the same sub-
stantive rights would be at issue.
V. Effective Date
As noted above, this section transforms the model agreement
into a unilateral contract and solves the problem of considera-
tion. Paragraph A. also states that the agreement is not ef-
fective unless the site is approved.
Paragraph B. is designed to protect the site owner in the
situation that the Board passes the required resolution but then
either it or its members or other community representatives take
action to undermine the effectivess of the resolution. In such
*
a case, the site owner may terminate the agreement if it alerts
the Siting Board of the fact in time for it to delay its decision
on the application until it has had time to consider the effect
of the lack of an agreement. The same paragraph also protects
either party in the event that anything else occurs to make the
agreement unsatisfactory during the possibly long period of time
between the filing of the application for site approval and the
ruling on it.
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Model Compensation Agreement
Between
The Town of Riverdale
Town Hall
Room 101
Riverdale, U.S.A.
and
Waste Management, Inc.
101 Main Street
Riverdale, U.S.A.
WHEREAS Waste Management, Inc. plans to build a hazardous
waste management facility (HWMF) on a site which it owns
in the Town of Riverdale, and which is located at
; and
WHEREAS the construction and operation of the said HWMF will
result in increased traffic in the Town of Riverdale, re-
quiring additional expenditures by the Town of Riverdale
for traffic control and road maintenance; and
WHEREAS the construction and operation of the said HWMF may
result in odors, noise and/or air pollution and thereby
cause damage to the residents of Riverdale and to public
facilities owned by the Town of Riverdale; and
WHEREAS the construction and operation of the said HWMF may
result in adverse impacts on the- beauty and quality of the'
environment of Riverdale and thereby lower property values
and reduce the property tax base of the Town of Riverdale;
and
WHEREAS the construction and operation of the said HWMF may
result in ground and/or surface water pollution and thereby
cause damage to the public water supply owned and operated
by the Town of Riverdale; and
WHEREAS "the construction and operation of the HWMF will result
in the need for additional expenditures by the Town of River-
dale for public services, including fire and emergency spill
response services, facility inspections and ground and surface
94
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-2-
water monitoring ; and
WHEREAS the construction and operation of the HWyj -ay increase
the risk, of other damages to residents of Riverdale and/ or to
the Town of Riverdale; and
WHEREAS Waste Management/ Inc. has agreed to undertake the mitigation
measures specified in this agreement; and
WHEREAS Waste Management,, inc. has agreed to compensate the residents
of Riverdale and the Town of Riverdale for such costs as are
specified in this agreement;
The parties have agreed as follows :
I. Cash Compensation and Fees
A. Waste Management, Inc. shall pay the following amounts
to the Town of Riverdale as compensation for the costs which
will be imposed on it by the construction and operation of
the HWMF:
(1) Upon approval of the site by the State Facility
Siting Board: $ _ / as capital for extensions of local
services ;
C2) Upon commencement of operation of the HWMF:
as compensation for start-up expenses connected
with extension of local services.
B. Waste Management, Inc. shall also pay the following
amounts to the Town of Riverdale:
(JL). During the two years commencing on the first
date of operation of the HWMF, a fee of five cents ($.05) per
kilogram of waste delivered to the HWMF.
(2) Thereafter, a fee as mutually agreed by the
parties from time to time; provided that, if the parties are
mutually unable to agree on a fee at any time, the fee shall
be set at an amount equal to three cents ($.03) per kilogram
times the number of whole years that the HWMF has been in
operation.
95
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-3-
II. Provision of Services and Other Compensation
A. Waste Management/ Inc. shall provide, without charge,
disposal services for up to kilograms per month of ha2ar-
dous wastes, as defined by the Resource Conservation and Re-
covery Act, 42 U.S.C. §6903(5), generated by any party or
parties designated by the Town of Riverdale.
B. Waste Management, Inc. shall purchase the site located
at _, or an equivalent alternative site
mutually agreed upon by the parties, and construct thereon
a recreational facility to be dedicated to the Town of River-
dale, as further specified in Appendix I to this agreement.
IIL Conditions of Construction and Operation
A. Prior to commencement of construction, Waste Management,
Inc. shall purchase and maintain insurance coverage for liabili-
ty to third parties for personal injury and property damage in
an amount not less than $ __ per occurance.
B. Waste shall be transported to the HWMF only along the
route specified in Appendix II to this agreement. No wastes
shall be transported to the HWMF except during the hours of
9:00 a.m. to 5:00 p.m. Mondays through Fridays. No more than
truck loads of wastes shall be delivered to the
HWMF per day.
IV. Additional Compensation in the Event of Breach
A. In the event that any one or more of the conditions
stipulated in this agreement shall not be met, the Town of
Riverdale shall be entitled to further compensation for the
damage caused by breach of the said condition. The compensa-
tion shall be determined according to the procedure described
in paragraphs B,C and D below; provided that the Town of
Riverdale1s right to such further compensation shall not
derogate from any right to other remedies which may be avail-
able to it under law.
B. In the event that a dispute shall arise over whether
any one or more of the conditions stipulated in this agreement
have been^met, the question shall be decided by a committee
of'three experts, appointed according to paragraph C below.
The decision of the said committee shall be final and binding
on those parties.
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C. The committee of experts shall be appointed as follows:
. (1) In the event that Waste Management/ Inc. rejects
a claim by the Town of Riverdale that any one or more of the
conditions in this agreement have not been met, the Town of
Riverdale may demand that the claim be resolved by the commitee.
(2) Within fifteen (15) days of written demand to
this effect by the Town of Riverdale, each party shall appoint
one member of the committee.
(3) The third member, who shall act as chairperson,
shall be chosen by the two members appointed by the parties,
and failing agreement between them, by .
D. In the event that the committee of experts shall decide
that one or more of the conditions stipulated in this agreement
have not been met, the additional compensation to which the
Town of Riverdale is entitled under paragraph A above shall
be determined as follows:
(1) The Town of Riverdale shall submit a claim to
Waste Management, Inc., who shall respond to that claim within
ninety (90) days.
(2) If Waste Management, Inc. rejects the claim,
representatives of both parties shall meet, together with a
mediator who shall be named by the chairperson of the committee
of experts which determined that the condition had not been
met.
(.3) With the help of "the said mediator the parties
shall negotiate in good faith and shall attempt to evaluate
the further costs imposed on Riverdale by breach of the relevant
condition.
04) Should the parties fail to reach agreement on this
matter, the' question shall be submitted to arbitration before
an arbitrator who shall be appointed by the mediator.
(5) The arbitrator's decision, which will be final
and binding on both parties, will stipulate the sum of compen-
sation to be paid, or services to be provided and the time when
such compensation will be paid or services provided.
t6) The arbitrator shall determine which of the
parties shall pay the costs of the arbitration.
97
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-5-
V. Effective Dates
A. This agreement shall become effective and binding on
the parties when the application of Waste Management-, Inc.
for approval of the site is approved by the State Facility
Siting Board if, within one month of the signing of this
agreement, the Governing Board of the Town of Riverdale
shall have passed the resolution, contained in Appendix III
of this agreement, in support of the said application.
B. This agreement may be terminated by either party if
both of the following conditions are met:
(1) Written notice .of the termination, together with
a request for a stay of the proceedings on the application of
Waste Management, Inc. for approval of the site by the State
Facility Siting Board is received by the Board prior to its
ruling on the application.
C2) Written notice of the termination is delivered
by hand to the other party at the office address provided in
the heading of this agreement, above.
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APPENDIX E-2
Model Compensation Agreement: Between
Waste Management, Inc. and John F. Kane
Introduction
The model agreement sets forth a number of provisions for
mitigation, compensation, and incentives to "John F. Kane"
for the potential and certain impacts of a hazardous waste
management facility (HWMF) to be constructed and operated by
"Waste Management, Inc."
The problem of securing proper "consideration" is not as
difficult in private compensation agreements as it is in agree-
ments with local governments since private parties may freely
agree to support a HWMF in the future, regardless of the pub-
lic interests affected. Nevertheless, the best structure for
a private compensation contact is the same as for an agreement
with the government: a unilateral contract. Such an agreement
does not go into effect unless one of the parties (here, John
F. Kane) completes the action that constitutes the consideration
for the other party's promises.
99
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Sections I, II, and III of the model agreement contain a
few examples of compensation, mitigation, and incentives that
can be included in the agreement. They differ, of course,
from the items contained in the model agreement with the Town
of Riverdale. Some of the provisions, however, are similar.
I. Cash Compensation and Fees
Paragraph A. of this section contains a single lump sum
fee stated to be compensation for the major construction impacts
of the HWMF. Paragraph B. sets up a monthly fee in exchange
for continued forebearance from bringing an action for damages.
This fee may be renegotiated from time to time.
II. Provision of Services and Other Compensation
As an incentive, paragraph A. promises free disposal
services to John F. .Kane. Paragraph B. promises to create a
buffer strip between the HWMF and the abutting site. This
promise is a mitigation device, peculiarly suited for dealing
with abutters. Another mitigation device appears in para-
graph C., which provides that Waste Management, Inc. will pay
the costs of ground and surface water monitoring on the abut-
ting site.
100
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III. Conditions of Construction and Operation
Paragraph A. provides for setbacks and sideyards, to miti-
gate the impact of the HWMF further. Paragraph B. includes
additional mitigation measures in the form of spill prevention
practices.
IV. Additional Compensation in the Event of Breach
This provision, unlike the similar one in the public com-
pensation agreement, could not be completely removed without
affecting the substantive obligations of the parties. The sec-
tion does establish a procedure for handling damage claims
arising out of the operation of the HWMF and creates a fund to
compensate those claims. However, the section permits compen-
sation in instances where the harms caused are not actionable in
a court proceeding either as a breach of contract or as a tort.
Note that John P. Kane may pursue a claim under this procedure
without disturbing his right to a monthly fee under paragraph
I.E. Once the compensation fund is depleted, however, he
cannot pursue a remedy without forfeiting his monthly fee.
V. Effective Date
As noted above, this section transforms the model agreement
into a unilateral contract and solves the problem of considera-
tion. Paragraph A. also states that the agreement is not ef-
101
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fective unless the site is approved. Paragraph B. is designed -
to protect the site owner in the same manner as the comparable
paragraph in the public compensation agreement. In addition,
this paragraph diminishes the ambiguity of the word "cooperated"
in paragraph A. A court would normally interpret "cooperate"
to mean "reasonably cooperate" if the issue were raised before
it. However, Paragraph B. allows Waste Management, Inc. to
terminate the agreement if it believes that the quality of the
cooperation it is receiving is inadequate. Paragraph B. also
allows John F. Kane to terminate the agreement if it believes
that the cooperation being demanded is too burdensome. The
practical impact of Paragraph B., if neither party terminates
the agreement, is that this fact alone is strong evidence that
the cooperation given was "reasonable,"
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Model Compensation Agreement
Between
Waste Management, Inc.
101 Main Street
Riverdale, U.S.A.
and
John F. Kane
1 Rosebud Lane
Riverdale, U.S.A.
WHEREAS Waste Management, Inc. plans to build a hazardous
waste management facility (HWMF) on a site which it owns,
located at adjacent to property located
at which is owned by John F. Kane (the
"abutting site").
WHEREAS the construction and operation of the said HWMF will
result in increased traffic on Rosebud Lane in front of the
abutting site; and
WHEREAS the construction and operation of the said HWMF may
resuit in odors, noise and/or air pollution and thereby
cause damage to John F. Kane and to the abutting site; and
»
WHEREAS the construction and operation of the said HWMF may
result in adverse impacts on the beauty'and quality of the
environment of Riverdale and thereby lower the property
value of the abutting site; and
WHEREAS the construction and. operation of the said HWMF may
result in ground and/or surface water pollution and thereby
cause damage to the well water presently used to supply the
abutting site; and
WHEREAS the construction and operation of the HWMF will result
in the need for ground and surface water monitoring on the
abutting site; and
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-2-
WHEREAS the construction and operation of the HWMF may
increase the risk of other damages to John F. Kane-and/or
to the abutting site; and
WHEREAS Waste Management/ Inc. has agreed to undertake the
mitigation measures specified in this agreement; and
WHEREAS Waste:'Management, Inc. has agreed to compensate
John F. Kane for such costs as are specified in this agreement;
The parties have agreed as follows:
I. Cash Compensation and Fees
A. Waste Management, Inc. shall pay John F. Kane, upon
approval of the site by the State Facility Siting Board, the
amount of $ , as compensation for the annoy-
ance, noise, odor and other temporary impacts on the abutting
site from construction of the HWMF.
B. Waste Management, Inc. shall also pay John F. Kane
the following additional amounts for so long as John F. Kane
refrains from bringing suit for any property damage to the
abutting site arising out of the operation of the HWHF:
(1) During the two years commencing on the first
date of operation,of the HWMF, a fee of $ per
month.
(2) Thereafter, a fee as mutually agreed by the
parties from time to time; provided that, if the parties are
mutually unable to agree on a fee at any time, the fee shall
be set at $ per month.
II. Provision of Services and Other Compensation
A. Waste Management, Inc. shall provide, without charge,
disposal services for up to ' kilograms per month of hazar-
dous wastes, as defined by the Resource Conservation and Re-
covery Act, 42 U.S.C. §6903(5), generated by John F. Kane.
B. Waste Management, Inc. shall purchase from John F. Kane
for $_._.. ^ ___, a buffer strip designated as lot A on
the plan attached as Appendix I to this agreement and shall
plant thereon a hedge, acceptable to John F. Kane, and sufficient
to form a visual screen between the HWMF and the abutting site.
104
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-3-
C. Waste Management, Inc. shall reimburse John F. Kane
for the purchase and installation of ground and surface water
monitoring devices, as specified in Appendix II to this agree-
ment, and shall further reimburse John F. Kane for monitoring
services and maintenance of the said devices in an amount not
to exceed $_ per year.
III. Conditions of Construction and Operation
A. No wastes will be stored or disposed of on the HWMF
at locations less than ______ yards from the abutting site
or yards from Rosebud ILane.
B. Waste Management, Inc. shall.institute the practices
specified in Appendix III to this agreement for the prevention
of hazardous waste spills at the HWMF.
IV. Compensation for Damages
A. Waste Management, Inc. shall establish a fund of
which will be used to mitigate any effects of the
HWMF on individual residents: of Riverdale, with whom Waste
Management, Inc. enters into agreements substantially similar
to this agreement, and to compensate such residents for those
decreases in property values which result directly from con-
struction and/or operation of the HWMF.
B. Claims for mitigating measures and/or compensation by
John F. Kane shall be decided by an assessment
board of three people who shall be appointed in the manner
specified in paragraph C below.
.*
C. The assessment board shall be appointed as follows:
CD Within fifteen CIS) days of submission of a
claim to Waste Management, Inc. each party to this agreement
shall appoint one member of the board.
(.2) The third member, who shall act as chairperson,
shall be chosen by the two members appointed by the parties,
and failing agreement between them, by .
D.--A-fter affording John F. Kane and a representative of
Waste Management,.Inc. the opportunity to be heard on the
claim, the assessment board shall determine John F. Kane's
entitlement;.to compensation and/or mitigating measures. The
board may attach whatever conditions it deems appropriate to
the award of such compensation and/or mitigating measures.
105
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E. The liability of Waste Management, Inc. under this
agreement for all claims submitted by John F. Kane shall be
limited to the sum of the fund established under paragraph
A; provided that this fund shall in no way restrict the:
legal liability of Waste Management, Inc. for claims not submitted
to the assessment board, or for claims that cannot be met
due to depletion of the fund.
V. Effective Dates
A. This agreement shall become effective and binding on
the parties when the application of Waste Management, Inc. for
approval of the site is approved by the State Facility Siting
Board if John F. Kane shall have coop.erated with Waste Management,
Inc. in any hearings before the said Board.
B. This agreement may be terminated by either party if
both of the following conditions are met:
(1) Written notice of the termination, together with
a request for a stay of the proceedings on the application of
Waste Management, Inc. for approval of the site by the State
Facility Siting Board is received by the Board prior to its
ruling on the application.
(2) Written notice of the termination is delivered
by hand to the other party at the office address provided in
the heading of this agreement, above.
106
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APPENDIX F: POTENTIAL FOR UNEXPECTED STATE LIABILITY
The decision of a State to provide compensation or an
incentive to facilitate the siting of a hazardous waste manage-
12
raent facility (HWMF) will not normally subject the state to
liability for damages if that decision proves to have untoward
consequences for the community or neighboring property owners.
This conclusion is not altered even when the state has been
negligent in deciding to provide the incentive or compensation.
Of course, a State may voluntarily take on responsibility
for the HWMF, by contractually guaranteeing its safety. In
such a circumstance, the State may be held liable according to
the terms of its contract. Such liability, however, is not
"unexpected" and can readily be avoided simply by refraining to
enter into any agreements containing such guarantees.
The more difficult issue for State agencies is
whether the mere fact of providing incentives or compensation
.» •
can give rise to tort or similar forms of liability for State
negligence or violation of federally protected rights. Such
liability is generally precluded under principles of law that
provide immunity from tort liability for certain governmental
acts.
107
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One rationale for sovereign immunity is that nearly every
act of government he.s adverse impacts on some individuals. Such
impacts cannot be the basis for tort liability, however, if
government is to function. As U.S. Supreme Court Justice
Jackson once observed, "It is not a tort for government to
13
govern."
However, sovereign immunity means more than that govern-
ments are not liable for every adverse impact of their actions.
Where sovereign immunity applies, governments will not be held
liable for any adverse inputs of their actions, even if those
actions were negligent and the impacts were directly caused by
them.
Until 1957, sovereign immunity shielded every state from
tort liability for every governmental activity. In that year,
Florida became the first state to abolish sovereign immunity
14
in some contexts. At least 26 states have now abolished or
15
modified the immunity rule. Nevertheless/ most jurisdictions
have retained immunity in some contexts so as to avoid the spectre
of one branch of government reviewing the reasonableness of a
co-equal branch. The California Supreme Court has explained:
"(There must be) an assurance of judicial ab-
stention in areas in which the responsibility
for basic policy decisions has been committed
to coordinate branches of government. Any wider
judicial review, we believe, would place the
court in the unseemly position of determining the
propriety of decisions expressly entrusted to a
coordinate branch of government.'
In order to assure that courts will not review the reason-
ableness of "basic policy decisions," most jurisdictions have
108
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adopted a "discretionary function" rule of immunity. Under that
rule a state is immune from liability for its acts if the act
involves high level policy decisions which have been entrusted
to the executive branch of government, and are thus inappropri-
ate for judicial review.
The discretionary function rule originated with the Federal
Tort Claims Act of 1946, which abolished federal soverign immunity
and allowed tort claims to be brought against the United States
government for the first time. The Act, however, retained immunity
for:
"(a)ny claim...based upon the exercise or
performance or the failure to exercise or
perform a discretionary function or duty
on the part of a federal agency or an em-
ployee of the Government, whether or7not
the discretion involved is abused."
Several states have enacted legislation patterned after the
18
Federal act. Even where State statutes are totally different,
however, the courts have essentially carved out the same area of
governmental discretion to which immunity applies. For example,
the New York Court of Appeals has interpreted that state's tort
claims act, which contains no express immunity whatever, as retain-
ing immunity for discretionary actions. As the court explained:
"To accept a jury's verdict as to the reason-
ableness and safety of a plan of governmental
body which originally considered and passed on
the matter would be to obstruct normal govern-
mental operations and to place in inexpert
hands what the Legislature has seen fit to en-
trust to experts."19
ftie decision to provide compensation or incentives to a
community to facilitate the siting of a HWMF clearly appears to
109
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be just the sort of discretionary activity that tort immunity
rules were designed to protect. Such a decision appears to
involve the judgment of state officials entrusted with power to
make the decision. Nevertheless, this conclusion cannot be
reached automatically. Even "ministerial" actions - the term
used to describe acts which are not discretionary and for which
there is consequently no immunity - may involve some degree of
judgment.
Ministerial actions are sometimes contrasted with dis-
cretionary acts on the basis that they involve execution rather
than formulation of policy. Using such a distinction, a de-
cision to provide compensation or incentives in all cases that
meet certain criteria would be discretionary, while a decision
as to whether a particular objective criterion had been met
would be ministerial. Theoretically, then, a decision to provide
compensation or incentives might turn on a purely ministerial ap-
plication of policy, and thus might be the subject of a tort suit.
In practice, however, the decision to provide compensation or in-
centives will not be based on such objective criteria, but rather
on policy determinations concerning such factors as the urgency of
the need for additional facilities. These determinations are
more clearly matters of discretion.
The issue of immunity is somewhat different if the allegation
is that the decision to provide compensation or incentives has
interfered with a right secured by federal law. Such an allegation
22
may conceivably be made under Federal civil rights statutes,
-------
using the Resource Conservation and Recovery Act (RCRA) as the
source of the Federal right. However, while the civil rights
statutes have been applied to allow money damages to be assessed
against other levels of government. States are granted absolute
immunity by the eleventh amendment from suits for damages in
23
federal court. While this immunity has not. been extended to
actions for equitable relief such as injunctions, this fact will
be of little use to a litigant whose sole basis for relief is a
decision to provide incentives or compensation since the decision
and its implementation would likely be complete at the time the
action is brought.
Thus, it may be concluded that the decision to provide in-
centives or compensation to a community to induce or facilitate
its acceptance of a HWMF will not open the State to unexpected
liability. Unless the State expressly binds itself to guarantee
the safety of such a facility, it will be immune from suit for
even a negligently made decision to provide such compensation or
incentives.
Ill
-------
APPENDIX G: PRESENT VALUE OF 9**DUE IN « PERIODS AT i INTEREST PER PERIOD
H
M
N)
Rate of interest, %
1.0 1.5 2.0
2.5
3.0
4.0
5.0
6.0
Rate of interest, %
8.0 10.0 15.0
20.0
25.0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
25)
30
35
40
45
50
.9950
.9901
.9851
.9802
.9754
.9705
.9657
.9609
.9561
.9513
.9466
.9419
.9372
.9328
.9279
.9233
.9187
.9141
.905)6
.9l>5»
.9006
.85)01
.85)10
.8872
.8828
.87H4
.H740
.8(55)7
.8053
.Kf.HI
.8.15J8
.815)1
.7?)5X)
.775)3
.9901
.9803
.9700
.9610
.9515
.9420
.9-327
.9235
.9143
.9053
.8963
.8874
.8787
.8700
.8613
.8528
.8444
,8300
.8277
.811)5
.8114
.8034
.7954
.7876
.77S)«
.7720
.7644
.7568
.74(.)3
.74 H)
.705!)
.0717
.035)1
.6080
.9852
.9707
.9563
.9422
.92S3
.9145
.90)0
.8877
.8748
.8617
.8489
.8364
.8240
.8118
.7999
.7880
.7764
.7649
.7538
.7425
.7315
.7207
.7100
.695)5
.685)2
.675X1
.605)0
.055)1
.045)4
.G35JK
.55)35)
.5513
.5117
.4750
.9804
.9612
.9423
.9238
.9057
.8880
.8706-
.8535
.8368
.8203
.8043
.7885
.7730
.7579
.7430
.7284
.7142
.7002
.6864
.6730
.6598
.6468
.6342
.6217
.0095
.55)70
.5855)
.5744
.5031
.r>r>2i
.SOW
.4525)
.4102
.3715
.9758
.9518
.9286
.9060
.8839
.8623
.84 J3
.8207
.8007
.7812
.7621
.7436
.7254
.7077
.0905
.6736
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Appendix Footnotes
1, See Freilich & 0_uinnf "Effectiveness of Flexible and Conditional
Zoning Techniques—What They Can and What They Can Not Do for Our
Cities," 1979 Proceedings of the Institute on Planning, Zoning and
Eminent Domain 167, 193 (.Southwestern Legal Foundation)
2. In the unusual circumstances where no such discretion exists, how-
ever, a permit must be issued whenever the statuatory criteria are
met, and no additional conditions can be imposed. Statutes that
confer authority on a particular board to issue HWMF permits, however,
appear always to vest some discretion in the board,
3. See, e.g. r Bringle vv Board of Supervisors, 54 Cal, 2d 86, 351
P.2d 765 (I960) (zoning variance),
4, See, Pioneer Trust Savings Bank v. Village of Mt, Prospect, 22 111,
2d 373, 176 N.E,2d 799 (1961).
5. For example, some courts have been reluctant to approve mandatory
dedications for schools. Id.
6. Maryland v. Environmental Protection Agency, 530 F.2d 215,
225 (4th Cir. 1975), vacated and remanded, per curiam, on
other grounds, sub nom. Environmental Protection Agency
v. Brown, 431 U.S. 99 (1977).
7. Linde & Bunn, Administrative Law 832 (1976)
8. Perkins v. Lukens Steel Co., 310 U.S. 113, 127 (1940)
9. Kretzmer, "Binding Communities to Compensation Agreements
for Facilities" Document No. 16, Energy Impacts Project,
Laboratory of Architecture and Planning, Massachusetts
Institute of Technology, Report to the U.S. Department of
Energy (1979)
10. Research revealed no instance where the validity of a
public expenditure was challenged on the basis that the
bargained-for promise was illusory. Exhaustive research,
however, was not undertaken.
11. Courts sometimes state that decisions of this type are
entitled to a presumption of validity. See, e.g._, Caleb
Pierce, Inc. v Commonwealth, 453 Mass. 306, 237 N.E. 2d 63
(1968).
113
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12. This issue discussion does not address peculiar provisions
of state law that might conceivably alter its conclusions
in certain circumstnaces in a single jurisdiction. While no
such provisions were identified in the course of research,
an exhaustive search was not undertaken.
13. Dalehite v. United States, 346 U.S. 15,57 (dissenting)(1953).
14. Hargrove v. Town of Coca Beach, 96 So.2d 130 (Fla. 1957).
15. See cases collected in Comment, "The Discretionary Exception
to Government Tort Liability," 61 Marquette L. Rev. 163, n.2
(1977)
16. Johnson v. State, 69 Cal.2d 782, 248 P.2d 352 (1968)(emphasis
in original).
17. 28 U.S.C. p2608 (a).
18. s*»e, e.g., Alaska Stat. p9.50.250(1); Cal. Gov't Code p820.02;
Iowa Code Ann. p25A.14.1; Minn. Stat. Ann. p466.03(6).
19 • Weiss v. Fote, 7 N.Y.2d 579, 167 N.E.2d 63 (1960) .
20. See, e.g., Elgin v. District of Columbia, 337 F.2d 152, 155
(D.C.Cir. 1964).
21. The problems of proof in such a suit would be astronomical,
however. At a minimum, it would be necessary to prove that
the decision to provide, compensation or incentives was the
proximate cause of the harm alleged. If there was any interven-
ing superceding cause such as negligent design or operation of
the facility the causal link would be broken and the suit would
fail.
22. 42 U.S.C. p!983.
23. See Sketianv. Board of Trustees, 538 F.2d 53, cert, denied,
429 U.S. 979 (1979).
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