JRB No.: 2-817-03-785-05 WASTE STREAM CONTROL Final Report Prepared for; U.S. Environmental Protection Agency Office of Solid Waste 401 M Street, S\4 Washington, DC 20460 Prepared by; JRB Associates 8400 Westpark Drive McLean, VA 22102 EPA Contract No.: 68-01-6000 July, 1982 ------- ACKNOWLEDGEMENTS This report was prepared by Dick Richards and Edward F. Tokarski of JRB Associates and Susan Mann of the Office of Solid Waste, U.S. Environmental Protection Agency. Funding was provided through the Technical Assistance Panels Program under EPA Contract No. 68-01-6000. ------- TABLE OF CONTENTS Page INTRODUCTION 1 METHODS TO CONTROL THE FLOW OF MUNICIPAL SOLID WASTE 5 2.1 Mandates 5 2.2 Contracts 2.3 Incentives 2.4 Summary CHOOSING A WASTE CONTROL STRATEGY 19 3.1 Single Municipalities 19 3.1.1 Contract or Franchise Systems 20 3.1.2 Independent Systems 21 3.1.3 Recommended Strategy 21 3.2 Regional/Multijurisdictional Entities 22 3.2.1 Interlocal Regional Commissions 23 3.2.2 Private Ventures 25 3.3 State Agencies 26 3.3.1 Agency with Full Authority 26 3.3.2 Agency with No Local Authority 28 3.4 Interstate Agencies 29 3.4.1 Interstate Regional Commissions 30 3.4.2 Private Bistate Ventures 32 3.5 Summary 33 PLANNING TO CONTROL WASTE FLOW 35 GLOSSARY APPENDIX A: DISCUSSION OF LEGAL ISSUES RAISED BY THE AKRON, OHIO, WASTE CONTROL ORDINANCE A- APPENDIX B: SYLLABUS OF Community Communications, Co., Inc.. vs. City of Boulder, Colorado, et al B- APPENDIX C: PROJECT SUMMARIES . C- iii ------- LIST OF FIGURES liffiiESI Page 1 RELATIONSHIP BETWEEN NET PROCESSING COST AND WASTE THROUGHPUT FOR A 1500 TPD MASS-BURNING RESOURCE RECOVERY FACILITY , v ------- 1. INTRODUCTION TO WASTE STREAM CONTROL An increasing number of communities, municipalities, and private industry organizations are seriously considering capital intensive resource recovery systems as an alternative to land disposal of municipal solid waste (MSW). According to the U.S. Conference of Mayors (City Currents, March 29, 1982), there are in presently 68 resource recovery facilities in the United States that are operation, in shake-down, under construction, or in advanced stages of planning. Forty-one additional jurisdictions are reportedly committed to implementing some type of resource recovery project. A growing awareness of the environmental impact of land disposal has led to stricter regulation of this disposal method and resulted in higher costs for land disposal. The attraction of resource recovery is its ability to reduce the volume of material to be landfilled while offsetting a portion, of disposal costs through the sale of recovered materials and/or energy. This continuing increase in the expense of land disposal provides an incentive to recover the valuable components of MSW. Resource recovery facilities are basically manufacturing plants that use a raw material—solid waste—process the material, and produce an end product—energy and/or recovered materials such as refuse-derived fuel (RDF), glass, metals, and mixed paper. Like any manufacturing plant, these facilities must operate at or near design capacity to prove economically successful. Figure 1 shows the effect of decreases in MSW throughput on the net cost per ton for a hypothetical 1500 TPD mass-burning facility. Since many of the annual operating costs of such a facility are fixed, particularly debt service and to some extent labor, the impact on the cost per ton of reducing the quantity of MSW processed is dramatic. Therefore, an important factor toward economic success of a resource recovery project is that it receives enough waste to operate at or near its capacity. The waste delivered need not include the recoverable materials found in municipal solid waste, such as metals, glass, corrugated paper, and newsprint. Energy recovery can be compatible with a .source separation program to recover these materials 1 ------- Figure 1. Relationship between Net Processing Cost and Waste Throughput for a 1500 TPD Mass-burning Resource Recovery Facility 2 ------- provided the system is designed to reflect any resulting change in the composition and quantity of waste received. Methods for ensuring that sufficient MSW is delivered to a resource recovery facility can be categorized according to three principal types: 1. Mandates— State legislation or local ordinances directing that all waste generated within specified areas be delivered to identified disposal facilities. 2. Contracts— Agreements between facility owners and/or operators and the organization which has control over the waste for delivery of specified quantities of MSW. 3. Incentives — Actions that offset existing economic conditions so as to make delivery of waste to resource recovery facilities more attractive to haulers. Comprehensive analysis of the existing situation is essential to choosing the waste control method or methods that best suit a given set of conditions. The following sections of this report address the issue of waste flow control, with the objective of clarifying this complex issue. Chapter 2 contains detailed discussions of flow control methods, followed (in Chapter 3) by an analysis of the effects of various situations on these methods. Finally, Chapter 4 stresses the importance of early planning to minimize problems in flow control implementation. A glossary of frequently used terms follows Chapter 4. 3 ------- 2. METHODS TO CONTROL THE FLOW OF MUNICIPAL SOLID WASTE In developing a waste control program, waste management officials can select from various methods in the categories of mandates, contracts, and incentives. Methods from one or more of these groups can be combined to form an effective waste control strategy. These methods are discussed in the following pages. 2.1 MANDATES Waste control can be achieved through legislation directing all waste generated within a specified area to a designated site. Those haulers failing to obey the ordinance would risk the loss of their operating licenses, fines or other civil penalties. The two basic qualifications for the validity of mandates are: 1. Mandates can be enacted only by a unit of government granted the authority to enact such legislation by the state. 2. The mandate must be constructed so that it does not conflict with any state and/or Federal laws. Mandating waste control has several advantages: 1. All waste generated within the area of concern regardless of present collection and disposal methods is (theoretically) under control. 2. Mandates can be enacted very early in the planning stages, requiring little preliminary work. In order for waste stream control to be achieved through contracts, for instance, it would usually be neces- sary to accurately determine project economics and set a tipping fee in order to obtain a long-term commitment from a municipality. 3. Mandates preclude the time-consuming and complicated negotiations among numerous parties usually required in contract negotiations. tf mandates are the method chosen to achieve waste control, a government unit must have authority to enact the measures, which in turn must conform to 5 ------- existing constitutional and statutory provisions. The issues of authority to enact legislation and constitutionality of mandates for waste disposal are not well defined. In 1979, the U.S. District Court for the Northern District of Ohio, Eastern Division, upheld a waste control ordinance enacted by the City of Akron, Ohio, directing waste generated in the City to the City's resource recovery facility. (Glenwillow Landfill, Inc., et al., v. City of Akron, and Hybud Equipment Corporation, et al., v. City of Akron, 485 F.Supp. 671 (N.D. Ohio 1979). Subsequently, Glenwillow Landfill, Inc., joined the appeal of the Hybud Equipment Corp. to the U.S. Court of Appeals where the lower court decision was upheld in July, 1981, Hybud Equipment Corp. v. City of Akron 654 F.2d 1187 (6th Cir. 1981). However, in January, 1982, the U.S. Supreme Court handed down a landmark ruling on the extent to which home-rule cities are immune to Federal antitrust laws, Community Communications, Co., Inc., v. City of Boulder, Colorado, et al. 102 S.Ct. 382 (1982). Subsequently, the Supreme Court vacated the Appeals Court decision in Hybud and returned it to that court for reconsideration in light of the Community Communications v. Boulder decision. A brief discussion of the legal issues involved in the litigation over the Akron ordinance follows. A more comprehensive discussion of the Glenwillow and Hybud cases is included as Appendix A. The Akron facility was financed through $46 million in tax-exempt bonds issued by the Ohio Water Development Authority (OWDA) and through $10 million in general obligation (GO) bonds issued by Akron, Ohio, and Summit County, Ohio. GO bonds were issued when problems arose in marketing the revenue bonds. The financing arrangement was set forth in a cooperative agreement among OWDA, the City of Akron, and Summit County. One of the clauses of that agreement provided that the City and County would take measures to ensure that all waste generated in their jurisdictions be taken to Akron's Recycle Energy System (RES). The bond underwriters, Dillon, Read, and Co., also required that the waste supply be secured in order to make the bonds more attractive even though projections showed that the facility would be economically competitive. In 1976, the Akron City Council passed a municipal waste control ordinance requiring that all MSW collected within the City be taken to the RES plant. Seeking to overturn the ordinance, haulers and landfill operators brought suit. The County did not enact a waste control ordinancej preferring to wait until all legal challenges to the City's ordinance were resolved. 6 ------- In upholding the Akron ordinance, the Federal District Court in Ohio ruled that control of local sanitation practices is a traditional example of the exercise of municipal police powers granted states and cities under the 10th Amendment. Previously, local municipalities had authority over waste flow within their jurisdictions only if that power were specifically granted by the state. In Glenwillow, the District Court ruled that under the Ohio Constitution, if chartered government units are given broad powers to establish government policy within their limits, and either there is no uniform State policy, or the State policy is to leave such decisions up to the local government, the local government unit is empowered to regulate the collection and disposal of solid waste within its borders. This decision modified the traditional interpretation so that unless states specifically reserve the right to set policy within local jurisdictions concerning waste control, local government units granted broad powers over solid waste management by a state constitution or legislation are, authorized to control waste flow by mandate. Glenwillow also resulted in a clearer decision on property rights as they apply to solid waste. The court ruled that a waste control ordinance takes nothing of value from waste haulers. The ordinance merely removes from the hauler the ability to decide where waste is disposed. The court ruled that this "right" is not a property right of haulers requiring protection and, therefore, waste control ordinances do not deprive haulers of property without due compensation. The Akron ordinance concerned only waste generated within the corporate limits of the City of Akron, Ohio. The court ruled that although the ordi- nance may affect the interstate flow of recycled material, this effect is related only indirectly to the ordinance. Therefore, a waste flow control ordinance that controls only solid waste generated within a local jurisdiction and not across state lines does not violate interstate commerce regulations. Finally, the Akron ordinance was determined not to be in violation of the Sherman Antitrust Act, since although it created a monopoly, the City of Akron was in effect acting as an agent of the State and therefore could not be 7 ------- regulated under Sherman. It was this element of the lower court decision in Hybud that resulted in it being vacated by the Supreme Court. The state action exemption under the Sherman Act is defined as applicable when a state, as sovereign, imposes anticompetitive restraints as an act of government. Such acts by the state are exempt from antitrust laws. The state action exemption applies to subdivisions Cfor example, municipalities) only when the subdivision is acting in accordance with a mandated state policy to replace competition with regulation or monopoly service. The Supreme Court ruling in Community Communications v. Boulder limited the extension of a state's antitrust immunity to its subdivisions. The syllabus of this decision is included as Appendix B. In order to benefit from this immunity, the subdivi- sion's anti-competitive actions - such as an ordinance - must be pursuant to a ( clearly articulated and affirmatively expressed state policy and must also be actively supervised by the state. Until the litigation in Hybud is resolved, it is uncertain what will be acceptable as "clear articulation and affirmative expression" and "active state supervision" regarding a state policy directing a subdivision to displace competition with regulation or monopoly public service. In Akron's case, it appears that OWDA's role in the project may satisfy these criteria since the cooperative agreement with OWDA, a State agency, specifically directed the City of Akron to carry out measures to ensure that all waste generated within the corporate limits of Akron be delivered to RES. However, for other municipalities and states, it may be necessary to amend the state constitution, municipal charters, or existing state statutes (such as those authorizing the formation of solid waste districts) to include specific language authorizing municipalities to enact waste stream control ordinances and designating or creating a supervisory agency. Alternatively, special purpose legislation could be enacted by the state legislature on a case-by- case basis. This approach could be difficult and time-consuming. In summary, waste control ordinances must meet the following criteria: 1. An implementing municipality must have either power specifically granted by the state to control waste within its borders or broad 8 ------- powers over waste management within its borders and no specific reservation by the state of the power to control waste flow. 2. A mandate must be enacted at the direction of the state or a state agency responsible for solid waste management in such a way as to preclude regulation by antitrust laws. 3. A mandate must not burden interstate commerce by directly controlling the flow of out-of-state waste. Ordinances controlling the flow of waste generated within the confines of an individual municipality do not directly affect interstate commerce; moreover, the effect of such ordinances on any interstate flow of recovered materials does not represent a direct impact on interstate commerce. 4. A mandate must serve the legitimate public purpose of assuring the health and safety of the public by guaranteeing safe disposal of solid waste. When these criteria are met, mandated waste control often will be the preferred method of flow control at the municipal level. Currently, the most obvious disadvantage of mandated waste stream control is the uncertain legal situation. It could take numerous court tests and several years to resolve the legal issues raised in the Akron case. In the meantime, any municipality adopting a waste stream control ordinance could be vulnerable to costly and time-consuming litigation by opponents of the ordinance. Consequently, it is recommended that mandates be used in conjunc- tion with other waste stream control methods that make use of the designated facility at least palatable, if not desirable, to waste generators and haulers. In this way litigation can be avoided. Another major drawback to mandated waste control is day-to-day enforcement. Enforcing a statute requiring that waste be delivered to a specified facility is difficult, especially if alternate disposal facilities charging lower tipping fees are available within a reasonable distance. The threat of having a license suspended or having to pay a fine may prove sufficient to ensure compliance; however, a substantially lower fee at alternative sites may provide haulers enough incentive to use those sites. In the latter case, effort must be made to reduce the difference between tipping fees. 9 ------- Under any circumstances, some provision is necessary for policing or enforcing an ordinance. A limited, highly visible effort at the start of a waste control program (for example, police or inspectors trailing waste haulers) will demonstrate that the ordinance will be enforced if need be. No other form of persuasion may be necessary to ensure compliance. Before mandates are enacted as waste controls, the existing situation should be studied to determine whether the mandate will achieve the desired result with minimal dependence upon enforcement. Another difficulty with mandated flow control concerns the scope of the ordinance. For instance, an anti-scavenging law in San Diego preventing the collection of bundled newspapers by any other than municipal employees was struck down when the court ruled that in segregating the newsprint, the generator attributed to it a certain value. If it has value, the newsprint cannot be considered waste, and local waste ordinances have no effect. Provision must also be made for "mixed" loads—those collected from both within and outside of the mandated control area in a single vehicle. Unless the mandate specifically states that "mixed loads" will be taken to the designated facility, only that portion of the waste collected in the con- trolled area need be disposed at the facility, a situation making enforcement extremely difficult. Consideration should be given to authorizing hauling unaer existing community-oriented or sponsored source separation programs to ensure public support for the project. Participants in these programs can be issued special permits, allowing them to continue operations as long as all material collected is brought to the recycling facility in exchange for remuneration at some predetermined rate. The resource recovery facility is thereby assured of public support, while the recycling programs continue to operate and generate funds for community groups. If the criteria of authority and constitutionality are met, and if issues such as enforcement and scope of the ordinance are successfully addressed, mandated waste control can be a very effective means of ensuring flow control. 10 ------- 2.2 CONTRACTS A second means of controlling waste flow is long-term contracts with generators/collectors of waste. The contract should be with the entity/ organization controlling the waste and preferably be written for the duration of the bond period. A typical contract guarantees that unless a specified quantity of waste is delivered over a specified time period to the facility, the generator/collector will pay a. penalty. These "put-or-pay" contracts are attractive because they are regular business tools familiar to waste manage- ment officials, they have minimal impact upon the existing waste management system, and they guarantee an assured quantity of waste for the facility. Waste flow contracts can be negotiated among several parties. Usually, this occurs between a resource recovery facility and municipalities. However, some municipalities do not assume responsibility for collection and disposal, allowing generators to contract directly with private haulers. The major problems in contracting directly with private haulers are that the private hauler does not, in fact, have control over the waste hauled and there is no guarantee that the company will remain in operation over the length of the contract. For this reason, long-term contracts negotiated directly between a resource recovery facility and private haulers are not recommended. Municipalities that contract with private haulers under a franchise system to fulfill their public collection responsibilities maintain de facto control over the waste stream. Under a franchise system, haulers are "licensed" and permitted to collect waste in the area. The municipality acknowledges that once waste is placed at the point of collection by the generator, the waste becomes the responsibility (that is the property) of the municipality. When a license is granted, the municipality may designate a facility as the sole disposal site for municipal waste, thereby exercising its police powers to assure the health, safety, and welfare of the citizens .-i However, there are some questions as to the through proper waste disposal. However, "tvine" the granting of licenses to using a particular legal implications of tying s t be examined before deciding upon this option, disposal site. Local laws muse 11 ------- Owner/operators of resource recovery facilities can negotiate "put-or-pay" contracts with municipalities for delivery of necessary quantities of MSW. Participating municipalities would be responsible for controlling waste generated within their jurisdictions. Once a decision was made to pursue negotiations with individual municipalities, the designated implementation authority would arrange contracts with the municipality to supply a given tonnage of waste. In addition to designation of waste tonnages and penalty provisions, the most important components of such contracts are the rate schedule for tipping fees, usually based on processing costs, and the term of the contract, recommended to be equivalent to the length of the bonding period. The Refuse Energy Systems Company (RESCO) mass-burning waterwall plant in Saugus, Massachusetts, has made extensive use of "put-or-pay" contracts of this type. RESCO currently accepts waste from 13 municipalities under long term contracts (20 years) and from two sanitation districts in Boston under shorter-term contracts. The tipping fees charged these communities are currently averaging about $16/ton (in 1980) and are adjusted each year.- Calculation of the adjustment is based on 50 percent of the annual percentage change in the local (Boston SMSA) Wage Survey Index (U.S. Department of Labor) and 20 percent of the annual percentage change in the base property tax rate of Saugus. This adjustment is applied to the original base tipping fee of $13/ton for most contract communities. A more detailed discussion of the Saugus, Massachusetts project has been included in Appendix C. Contracts are preferably negotiated early in the planning stages of a resource recovery facility. However, this may be difficult due to uncertain economics, and, given the history of the industry, municipal officials may be wary of entering into long-term agreements based upon a preliminary concept for a proposed resource recovery system. This reluctance to enter into long- term agreements that may benefit future taxpayers without providing immediate savings, represents a major obstacle. Finally, the success of contracts is dependent upon the participating municipalities' having control over the waste they agree to deliver. 12 ------- Municipalities providing their own collection services will have little difficulty delivering guaranteed quantities of waste. Where private haulers are responsible for collection, municipalities must enact measures to bring collectors under municipal control. After careful analysis of existing situations, municipalities may decide to enact mandates, implement franchise systems, or use some other mechanism to gain control over privately collected waste. Once this control has been achieved a municipality can enter into a contract guaranteeing delivery of its waste. Contracts are a very attractive method by which owners/operators of resource recovery facilities can secure adequate supplies of MSW. Aside from concerns about the long-term viability of contracts with private haulers, there are two principal drawbacks associated with the use of contracts: 1. Negotiation can be a time-consuming and complicated process. 2. Any party contracting to deliver waste must have actual control over the waste. Contracts have been used previously by several resource recovery projects. The Ames, Iowa, facility receives waste from 12 surrounding munici- palities under 25-year commitments, with the net costs of disposal being assessed on a per capita basis. Other facilities employing contracts include the CEA facility in Bridgeport, Connecticut, and the Saugus, Massachusetts facility. 2.3 INCENTIVES Incentives/disincentives seek to attract waste to a resource recovery facility by making project economics associated with using the facility more favorable. To be effective, these methods must somehow make it more attrac- tive for haulers to dispose of the MSW at the facility than at alternate sites. 13 ------- Incentives included in this category are: 1. Direct financial support or tax incentives to lower tipping fees. 2. Stricter enforcement of land disposal regulations to raise the cost of competition 3. Limiting of competition by closing alternate disposal sites and limiting new licenses. These methods are attractive because, unlike mandates, they aim to attract waste through the existing waste management framework. MSW moves through the system in the most economical way possible as collectors, transportersj and waste disposal site operators attempt to maximize profits. Incentives attract waste to a resource recovery facility by affecting the costs incurred by collectors and transporters of MSW. The "pre-paid user charge" is used extensively in the United States to finance wastewater treatment plants, and is becoming of increasing interest to resource recovery projects. Using this approach, a local government unit directly assesses solid waste generators for solid waste disposal. These tax- like revenues are used to support safe and sanitary disposal of the waste. Private haulers serving generators covered by the user charge can dispose of collected waste at a designated site for no additional charge. Since disposal charges have already been paid, generators would pay the hauler for collection and transport services only. Equity is achieved by basing the assessment on waste generation rates; those generating larger quantities of waste pay larger fees. The consideration that an additional tax on the general population may not be well received is one problem associated with this approach. Public opposition may be reduced to a degree by the usually small size of the additional burden. Moreover, if the facility is justified, a comprehensive public awareness program describing the program, the costs and benefits of resource recovery, the facility itself, and the need for a small user charge will, in many instances, reduce public opposition. 14 ------- A second concern is that a zero tipping fee will attract private haulers who collect from areas not subject to the user charge. Waste quantities disposed at the facility would increase, but at the expense of those paying the user charge, who would be subsidizing waste disposal service for generators in untaxed areas. Even a strict licensing and inspection program combined with monitoring of private hauler collection routes may not be able to prevent this. Therefore, user charges may not prove feasible for some municipalities located within a multiple-jurisdictional area. Although a user charge approach to waste control does not guarantee that waste will be delivered to a facility, since there are no legal or contractual requirements, a zero tipping fee should provide sufficient incentive to assure Che flow of available waste to the facility. In order to ensure a supply of waste for an incinerator where tipping fees were substantially higher than alternative disposal sites, Montgomery County, Ohio, enacted an ordinance directing waste to that facility. However, the State Supreme Court ruled that the ordinance was unconstitutional since the County did not have State authority to enact such legislation. Faced with this loss of revenue, the County assessed a user charge of property owners and businesses and eliminated the tipping fee. The user charge was the subject of a subsequent suit but was upheld by the court as a means of raising revenues necessary to support safe and environmentally sound disposal. Another incentive is to raise the cost of competition by strictly enforcing environmental regulations. Many land disposal facilities currently operating in the United States do not meet the criteria of the Resource Conservation and Recovery Act and therefore, as "open dumps", must either upgrade their facilities or close. The costs incurred by these sites in upgrading will raise tipping fees at the site. Where the rise is substantial, the cost of using the resource recovery facility may become competitive with, or less than, landfill tipping fees. Thus, waste flows to the facility due to favorable economics. The major difference from the user charge is that the subsidy is provided by generators indirectly in the form of increased waste disposal fees paid to private haulers, who are charged a higher tipping fee at the facility. 15 ------- In order to use this type of incentive, the organization sponsoring the facility must be in a position to influence those responsible for environ- mental quality. Since most environmental regulations are enforced by state agencies, influence must be at that level. Local governments can wield considerable pressure through zoning ordinances. Lobbying on the state level for strict interpretation and enforcement of existing environmental regula- tions can also be very effective, especially if bipartisan pressure can be applied. The Lakeland, Florida, facility currently under construction is a good example of environmental regulations providing a disincentive for utilization of existing disposal sites. Lakeland expects few problems with waste stream control, in part because over half of the waste needed is collected by the City, but also because using the facility is economical for local haulers. Besides shortening the hauling distances, the facility will charge a competitive rate, somewhere below $10/ton. The existing landfill had charged a tipping fee of $6/ton until it was forced to upgrade to meet environmental regulations. The new tipping fee is expected to be $10 to $12/ton, making the planned resource recovery facility economically competitive. Still another means of limiting competition is for the implementing organization to purchase those disposal sites in direct competition with the facility. The sites can be used by the resource recovery facility to dispose of residue or waste unacceptable to the facility. When more than a few sites are involved, outright purchase of all may prove economically infeasible. Such issues as the extent of needed remedial actions and estimated remaining capacity must be addressed. Nevertheless, where few sites are involved, this option may prove feasible. The Connecticut Resources Recovery Authority (CRRA) purchased several landfills in the Bridgeport area for residue dis- posal, and the proposed Rhode Island project will benefit from state ownership of area landfills. 2.4 SUMMARY Mandates are legislative acts carried out by authorized government units directing the flow of waste to designated disposal facilities. Mandates are 16 ------- relatively easy to implement because they create monopolies and need not depend upon competitive tipping fees to ensure delivery of all wastes generated in an area to the designated facilities. The implementing organization must be certain of its authority to enact a waste control ordinance, and the ordinance must not conflict with any statutory or consti- tutional provisions. In order to avoid violation of antitrust laws, it appears that the involvement of state government and/or state legislation may be necessary. Mandates can be effective methods of controlling waste flow on the municipal and state levels, and in many instances are the preferred means of ensuring waste stream control. The major disadvantages of mandated waste flow control are the potential for costly and time-consuming litigation and the need for effective enforcement. Contracts can establish agreements between the owner/collector of the waste and the resource recovery facility to guarantee an adequate supply of MSW. Contracts assume that the owner actually has control over the waste. This usually precludes contracts with private haulers. A plant's anticipated tipping fee must be competitive with the fees of disposal alternatives for the contract to be attractive to haulers. Negotiation of contracts is usually time-consuming because of the complexity of the issues. Moreover, contracts may have to be negotiated among several parties to ensure control over an adequate supply of waste. Incentives/Disincentives are waste control methods that use economic means to attract waste to resource recovery facilities. The success of these methods depends upon the facility's tipping fee being competitive with those of existing land disposal facilities. Either subsidizing the facility or increasing the cost of using alternative disposal sites is necessary for the incentive/disincentive approach to be successful. 17 ------- 18 ------- 3. CHOOSING A WASTE STREAM CONTROL STRATEGY Experience indicates that successful waste control strategies are those specifically designed to accomodate existing local conditions. Each waste control method discussed in Chapter 2 has associated limits restricting its use. Before a waste control strategy can be developed for a given area, the existing situation must be carefully studied. The advantages and disadvantages of various waste control strategies in several narrowly defined situations are discussed in this chapter. Strategies are recommended for achieving waste stream control in certain situations given the type of implementing organization and legal, economic, and political issues involved. The types of organizations considered are: 1. Single municipality 2. Regional/multijurisdictional entity 3. State agency 4. Interstate organizations The following discussion is not designed to replace comprehensive analysis of existing situations as a prerequisite to development of waste control strategies. Rather, the objective is to describe individual control methods and the issues associated with their use in specific institutional settings. Summaries of several resource recovery projects are presented in Appendix C to illustrate the variety of approaches that have been taken to solve the problem of waste stream control. 3.1 SINGLE MUNICIPALITIES "Single municipality" refers to that level of local elected government that has public health responsibility for solid waste disposal, and includes politically independent and self-contained units of local government, for example, cities, towns, and incorporated villages, and can include counties depending upon levels of responsibilities. Not included in this category are solid waste authorities created by local or state governments. Single 19 ------- municipalities are primarily concerned with waste collected, transported, and disposed by private haulers, since waste collected by municipal services is already under their direct control. Private haulers are contracted to collect and haul waste through two principle mechanisms: 1. Contract or franchise system where the municipality contracts with or licenses private haulers to collect waste generated within its boundaries. 2. Independent system where generators contract directly with private haulers for collection, transport, and disposal services. The type of mechanism used to secure private collection service influences the success of waste control methods. 3.1.1 Contract or Franchise Systems Under the franchise system, municipalities enter into contracts with private haulers for collection and disposal services, or licenses collection in the area. The duration of these contracts or licenses is usually less than 5 years, whereupon the municipality relicenses haulers or relets the contract to the lowest bidder able to provide the requested service. In arranging for the private service, the municipality is acknowledging responsibility for collection and disposal of waste generated within its borders. The process gives the municipality implicit control over the waste. When a contract is rebid, the municipality reserves the right to choose a disposal site for the waste. Private haulers not agreeing to this stipulation are prohibited from bidding on the contract. Since the contracts usually include rate increases based on disposal site tipping fees, the municipality in effect subsidizes its own facility; under the contract, tipping fees paid at the site by private haulers are charged by the haulers to Che municipality. The cycle is complete when the funds reappear as tipping fees. 20 ------- There is still some question as to the legality of tying collection licenses to the use of a single disposal site. These tying arrangements should be carefully examined before being implemented. Franchise systems can be implemented by most municipalities. The authority for municipalities to contract solid waste collection and disposal falls under police powers: control ensures the health and safety of the populace. 3.1.2 Independent System Under the independent system, generators of solid waste contract directly with private haulers for collection and disposal services. In the absence of all control mechanisms, waste is collected, transported, and disposed in a manner that maximizes the profits of haulers. In this situation, municipal officials should use mandates, and/or incentives to direct the flow of waste. Since mandates can be used only by recognized units of government with the authority to enact legislation, it is essential to determine which unit of government has this authority. Criteria for determining authority to enact mandates are described in Section 2.1. 3.1.3 Recommended Strategy For single municipalities attempting to regulate private collection operations, the use of mandates is recommended, along with incentives, if necessary, to make the facility more competitive. The ordinances themselves must be narrowly defined to avoid conflicts with constitutional and antitrust laws and to successfully address such issues as scavenging, definition of "solid waste", proper procedures for mixed loads, and source separation. The only significant obstacle to mandated waste control is enforcing the ordinance. Difficulty with enforcement will increase in direct proportion to difference between tipping fees at the resource recovery facility and those at alternative disposal sites. If the difference is anticipated to be large, an incentive reducing the gap can be offered. The municipality must decide whether to support the facility through general funds to reduce the tipping fee to a competitive level, to force an increase in cost to the competition, 21 ------- or to enact a user fee and remove Che tipping fee altogether. If the last course of action is chosen, enforcement shifts from trying to ensure a sufficient flow of waste to the facility to trying to prevent the disposal of outside waste at the facility. In any event, by reducing the tipping fee to at least a competitive level, the threat of enforcement should be sufficient to ensure the flow of waste to the facility. This preferred strategy has several advantages: 1. Once authority is determined, the mandate is easily enacted. 2. Using incentives to make the facility competitive alleviates the problems of enforcement. 3. Unlike contracts, mandates require no time-consuming negotiations. 4. A mandate can be enacted early in the planning process to allow appropriate sizing of the facility. 5. Securing the waste stream early increases the attractiveness of the bonds used to support construction of the facility. For single municipalities sponsoring their own resource recovery facili- ties, the use of mandates, in conjunction with incentives where necessary, will ensure control of the flow of privately collected waste. 3.2 REGIONAL/MULTIJURISDICTIONAL ENTITIES Regional/multijurisdictional entities are solid waste management organiza- tions covering an area within one State and including several municipalities. Historically, these organizations have taken two different forms: 1. Interlocal regional commissions created by several adjacent munici- palities interested in resource recovery that pool their available waste streams to support a facility, thereby taking advantage of economies of scale. 2. Private ventures, organized by private firms, to create regional resource recovery facilities to dispose of waste from several adjacent communities. The private venture either benefits from any profits realized from facility operation or shares the profits with a local community. 22 ------- The major differences between these regional/multijurisdictional entities and state-authorized regional authorities like the Connecticut Resources Recovery Authority (CRRA) are their powers over legislation and their ability to secure funds for operations. Limits to the capabilities of regional commissions have a dramatic effect on both the waste control methods they can use and the preferred strategies to control waste flow, 3.2.1 Interlocal Regional Commissions Multiple jurisdictions pooling their resources usually create a semipublic commission, the responsibilities, autonomy, and authority of which depend upon the implementing charter. Municipalities enter into an interlocal agreement creating the commission to coordinate all activities necessary to successfully implement a resource recovery program. Depending upon the scope of the interlocal agreement, the commission may have extensive powers over bonding, siting, contracting, management, and operation of a facility. The issues raised in the use of each waste control method (i.e., mandates, contracts, and incentives) by these Commissions will be discussed. The legal authority to mandate waste flow from the communities to the identified site exists only if: 1, The individual towns have the authority to enact this type of ordinance (see discussion in Section 2.1); or 2. These powers are transferred from the municipalities to the commission or authority. Regional commissions do not have the power to enact mandates. The Glenwillow decision concerned a local, intrajurisdictional waste control ordinance; there is no precedent for interjurisdictional waste control ordinances based on transfer of powers from municipalities to regional commissions. Among the criteria for such ordinances are the following: 1. The ordinance must serve a legitimate local purpose. 2. The ordinance must be sufficiently related to a legitimate objective of local governments. 23 ------- 3. The ordinance muse not violate antitrust laws, i.e., it must be consistent with a clearly articulated and affirmatively expressed state policy and be actively supervised' by the state. 4. The mandate, presumably directing waste to a facility located outside the community where it is generated, must not conflict with any state's right to control interjurisdictional waste flow. These issues preclude the use of mandates by regional commissions. Interlocal regional commissions can negotiate contracts with member jurisdictions on a "put-or-pay" basis. The contract requires that individual municipalities deliver a specified quantity of waste to the facility or pay a penalty based upon the overall shortfall. CRRA used this approach for its Bridgeport, Connecticut, project where long-term commitments to supply waste were obtained from nine municipalities. The use of "put-or-pay" contracts removes the responsibility for control- ling waste flow to the municipality level. If the municipalities provide public collection services or use a franchise system, control at the municipal level has already been achieved. However, if substantial portions of the waste are collected by private haulers, a waste control strategy must be implemented by the municipality (see discussion in Section 3.1.2). It is difficult to determine the ability of interlocal regional commis- sions to use incentives to control waste flow. In general, interlocal regional commissions by themselves have no taxation powers; therefore, they cannot impose user charges. Moreover, commissions cannot use general operating revenues to support facilities because their budgets usually cannot encompass such an expense. While the commission may have some influence over enforcement of environmental regulations in the area, this influence is insufficient to guarantee the rise of disposal costs of alternative sites. Use of this method depends on state support. These commissions can only use incentives through close cooperation with member municipalities. Municipalities can enact user charges and can channel the funds to the facility through the commission. Municipalities can also 24 ------- divert general operating funds to the commission which may use these funds either to support the facility directly or to purchase competing disposal sites. Finally, the member municipalities can combine their political power to influence state policy and the enforcement of environmental regulations. "Put-or-pay" contracts represent the most attractive method for controlling waste flow available to interlocal regional commissions. Once contracts are signed, the commission is used to coordinate implementation of needed waste control methods on the municipal level. The commission can coordinate local efforts to influence enforcement of environmental regulations affecting alternative disposal sites, or can subsidize zero tipping fees by using funds collected as user fees by municipalities. Using contracts returns the responsibility for waste stream control to the municipal level, where strategies are readily available. Close cooperation by all parties is essential to contract use. Necessary interlocal coordination of funds, siting studies, and other management activi- ties will suffer without it. Indeed, without close cooperation, interlocal regional commissions face almost impossible obstacles for project imple- mentation. For example, in 1967, when the landfill serving Saugus, Massachusetts, was closed for health reasons, the town and eight other communities formed the North Shore Waste Disposal District (NSWDD) to develop a regional solution to the waste disposal problem. Even with active support from General Electric, which eventually purchased all steam from RESCO, the NSWDD could not organize a regional waste-to-energy project, although all the basic conditions that helped establish RESCO prevailed. The disagreements revolved around taxation, road use, facility siting, funding, and facility management. 3.2.2 Private Ventures The only means of achieving waste stream control available to private ventures is to cultivate relationships with several municipalities so that activities can be coordinated. The private venture then enters into "put-or-pay" contracts with the municipalities, and the municipalities take responsibility for guaranteeing adequate supplies of waste. 25 ------- The RESCO facility in Saugus, Massachusetts, is an excellent example of a private venture sponsoring a resource recovery facility. RESCO depends upon numerous "put-or-pay" contracts to ensure delivery of sufficient quantities of waste. The situation in Saugus before the establishment of RESCO was unique: lack of available landfill capacity, no suitable alternative landfill sites, available market, and existing high energy costs and high MSW disposal costs. The RESCO situation proves that under the right conditions, private ventures can successfully sponsor resource recovery facilities. The private venture was also helped along by timely state assistance in obtaining necessary permits and cooperation. 3.3 STATE AGENCIES State agencies sponsoring resource recovery activities on a regional or statewide basis can employ all waste control methods to develop flow control strategies. The preferred strategy depends upon the agency's level of authority over legislation, funding, and state policy. For the purposes of this discussion, two levels of authority are assumed: 1. An agency with full authority has complete control over waste manage- ment within the state, down to and including the municipal level; it controls funding and enforcement of environmental regulations, and has bond authority. 2. An agency with no authority has control over waste management in the State down to but not including municipalities, depends upon other units of state government for funding, and has limited influence over environmental regulations. 3.3.1 Agency with Full Authority Agencies granted full authority over solid waste management and resource recovery within a State can make'use of all methods to achieve control of publicly and privately collected waste. State agencies with authority to enact mandates on the municipal level can use these mandates to direct waste to a regional facility so long as constitutional provisions are not violated. Statewide mandated flow control programs much like that existing in New Jersey must consider interstate 26 ------- commerce regulations. However, requesting a mj. , , . „ . . g declaratory judgement," essentially a legal decmon preceding enactment of an ord i this issue early in the planning process. Enfnr nance, can resolve only difficulty anticipated with regard to state ^ ^ mandate iS the ® ^ LU State flow mn t 1 J- uuw control ordinances. Fully authorized state agencies can also make use of "put-or-pay" contracts with municipalities to assure deliv»>.„ r etivery of necessary suppiies of waste if the municipalities provide collection services n, . - , , . vices. The contracts can be reinforced with incentives to ma,e the contract attractive to municipal officials. Waste flows to the facility, and the municipalities disposal capacity for the foreseeable future A®*- h 8uaranteed , , .. . ' ' the use of contracts is not recommended to control privately collected waste. State agencies with control over taxation ,• u n C3n lmP°se user fees upon generators to be served by the proposed facilitv , . , . y' 1501:11 Private and public collection vehicles will be attracted to the faciw*,, v racility where the fee is pre-paid. State agencies .ay find it difficult co „se ^ ^ support a facility if the facility provides disposal service ^ a ^ ^ of the state. State legislators representing other regions may oppose using state funds fro. taxes imposed upon all constituents to provide services for citizens in one region (for example, state legislators from western Pennsylvania may object to using public funds to support a facility serving Philadelphia). While an added tax on the citizens served might not prove offensive to most legislators, the use of revenues generated fro. State taxes to benefit a small portion of the citizenry may evoke strong opposition. State agencies can use disincentives to attract waste to a regional facility. Their position a, units of state government should allow influence on enforcement of environmental regulations, resulting in raised tipping fees charged by competing sites. In addition, influence over „ev ,lte petmittin8 could be used to reduce competition and increase the probability that waste would flow to a regional resource recovery facility. Ultimately, a state agency can assume direct responsibility for solid waste management - and thus 2.7 ------- control of the waste stream - through purchase of the competing landfills. This approach was taken by the Rhode Island Solid Waste Corporation by purchasing the major landfills in the State that will become the disposal sites for residue and unprocessable waste when the planned resource recovery facility comes on-line. Fully empowered state agencies can make use of either contracts with municipalities or mandates affecting both public and private haulers to control waste flow. The effectiveness of mandates and contracts is dependent on the facility being economically attractive to waste haulers. State agencies can subsidize a facility through user fees and make a facility competitive, or they can reduce competition by purchasing alternate sites and influencing the enforcement of environmental regulations. 3.3.2 Agency with No Local Authority Agencies with no granted powers to enact mandates on the local level can sometimes control the flow of waste once the waste crosses the border of the municipality where it was generated. This is the case in Connecticut where CRRA can determine the disposal site for waste leaving a municipality but cannot interfere with the right of a municipality to develop a disposal facility within its borders. The agency may choose to lobby for a change in its charter to grant it the power to mandate flow control. Any such attempt, however, can be expected to meet heavy opposition from local legislators. Without very specific authority to control waste, these types of state agencies should not attempt to use mandate as flow control measures. Without the power to enact mandates, state agencies with little local authority must resort to using contracts and/or incentives/disincentives to reduce the cost of using a facility and to attract waste. Contracts between the agency and municipalities should be signed as early as possible after a firm price has been set. When negotiating with municipalities, the state agency should emphasize the assured disposal capacity of the facility and the 28 ------- benefits of safe disposal and recovered materials. Contracts with private haulers are not recommended as the sole means of controlling privately hauled waste. Using incentives may present some difficulty to these agencies, since some level of state funding will probably be necessary. Environmental regu- lations may be enforced more strictly, depending upon the level of authority within the state agency. The Connecticut Resources Recovery Authority is an example of a state agency with limited authority. CRRA had to sign "put-or- pay" contracts with surrounding communities to secure adequate supplies of waste. 3.4 INTERSTATE AGENCIES Interstate agencies sponsor resource recovery facilities designed to process waste generated in a given geographical region including two or more states. In these instances, the agency s latitude in choosing a waste control strategy varies, depending upon whether the waste is generated within the same state as the facility is located, or whether the waste will cross state bound- aries when it is transported to the facility. Interstate commerce regulations as well as other legal and political considerations become more significant with the transportation of waste across state lines, limiting agencies' options for waste control. Interstate agencies usually are established according to two types of implementation strategies: • Two adjacent communities located in different states pool their resources for a regional resource recovery facility that processes waste from both states, and create an interstate regional commission. • A private venture promotes a regional resource recovery facility and recommends it to a town or municipality, but the proposed facility needs waste generated in another State within the region to operate at design capacity. The waste control methods available to each organization, depending upon whether the waste is generated within or outside the state in which the facility is located, will be discussed in the following sections. 29 ------- 3.4.1 Interstate Regional Commissions In this discussion, these commissions are assumed to represent several towns within adjacent counties located in neighboring states. These towns have decided to coordinate planning efforts for resource recovery and to take advantage of economies of scale. The use of mandates is limited to those municipalities having the authority to enact this type of legislation (see discussion in Section 2.1) and located within the same state as the proposed facility. The municipality enacts an ordinance directing the flow of waste Co the proposed facility when it has been completed, and enters into a "put-or-pay" contract with the inter- state regional commission. Mandates cannot be enacted by municipalities located in a state other than that of a proposed facility. Interstate commerce regulations must be considered, and ordinances directing that waste cross state lines for disposal are likely to be struck down. Moreover, the state action immunity exempting municipalities from antitrust law may not be extended if the municipality attempts to force transportation of waste across the state line. Interstate regional commissions can use contracts to control municipally collected waste. by creating the regional commission, the municipalities have shown at least an interest in, if not an actual commitment to, resource recovery which should facilitate negotiation of contracts. The use of "put-or-pay" contracts does not raise any legal or political issues and is an easy way to assure waste stream control. The use of contracts by towns and municipalities to control privately hauled waste, thus removing the responsibility for waste stream control from the public regional commission, is more complex. Municipalities located in the same state as the proposed facility can use the incentives available to single municipalities, employing the independent system (Section 3.1.2). How- ever municipalities in a state other than that of the facility may encounter difficulty in using mandates and incentives to bring private haulers under 30 ------- control. As discussed previously, mandate? j • , . f wuaiy, manoaces cannot be used Ln this situation because of conflict with interstate commerce regulations, and incentives to support an out-of-state facility through either taxes or general operating funds may be opposed by citizens and/or politicians. Unless the out-of-state municipalities can obtain local control over privately hauled waste, contracts are not an option for waste control. Municipalities served by an interstate regional commission can support the use of incentives by either enacting user charge systems and transferring the funds received to the commission or can use other funding to reduce tipping fees. Funds have previously been transferred across state lines, notably by bridge commissions that receive funds from contiguous states. The only possible obstacle to transferring funds across state lines is public and political opposition, but if citizens appreciate the need for the facility, opposition should be minimal. Whenever possible, interstate regional commissions should use "put-or- pay" contracts to control waste flow. Transferring the responsibility for waste stream control to the individual municipalities and towns, as is being done in the New Hampshire/Vermont Solid Waste Project, greatly simplifies the waste control process. Municipalities providing public collection services already control waste flow. Private collection services can be controlled by mandates (where the waste does not cross state lines) or by incentives Careful planning can avert public opposition to interstate transport of waste. The experience of New Hampshire/Vermont Solid Waste Project proposed for the bistate region surrounding Claremont, New Hampshire, illustrates the complexities of interstate programs. Twenty-six regional communities, anticipating a disposal capacity crisis as local landfills became filled, together formed the New Hampshire/Vermont Solid Waste Project and received funds under EPA's Urban Grant Program. To provide additional support, communities in New Hampshire channeled funds through Sullivan County, New Hampshire, while Vermont municipalities participated through the Southern Windsor County Regional Planning and Development Commission. Some of the problems addressed by this coalition are described below. 31 ------- The only regional entities with the necessary legal and financial ability to implement a regional resource recovery program would be solid waste districts—one in Vermont and one in New Hampshire. The formation of new districts must conform to all existing statutory requirements. At present, Vermont requires an initial joint survey committee and New Hampshire a regional refuse disposal planning committee to draft district agreements. Since three representatives of each participating municipality are required for each committee, the Vermont committee would comprise 33 members, and the New Hampshire committee, 45 members. Once the district agreements have been drawn up, they would be voted on by the citizens of each participating municipality. The kind of interstate cooperative program proposed by New Hampshire and Vermont requires the approval, first, of both state legislatures and, second, of the United States Congress. A bistate compact, establishing cooperative arrangements (including financial support) between the two states for financial and other for the management of an interstate disposal system, has been approved by both state legislatures and is currently being considered by the U.S. Congress. By the time Congressional approval is given it will have taken at least 2 years to implement this compact. Interstate regional commissions seeking to establish similar interstate projects can anticipate confronting similar problems. 3.4.2 Private Bistate Ventures Private ventures are severely limited in their options for waste control. Such ventures have no authority to enact mandates; they usually have insufficient resources to make the proposed facility competitive; and unless a facility is competitive, contracts cannot be negotiated to ensure a supply of waste adequate to keep the facility operating at capacity. Private ventures must therefore convince neighboring communities of the need for resource recovery. The weight of public opinion can influence creation of a regional commission including members of the private venture in 32 ------- kev positions, without the support of such root/in*? * y L suc" regional commissions, private ventures have very few means of controlling waste flow other than using secured funds to make the facility competitive. 3.5 SUMMARY The simplest way for any organization to achieve waste stream control is to allocate this responsibility to the municipal level fay entering into "put- or-pay" contracts. Municipalities can direct waste flow either by local ordinances or through cooperation with state agencies, and can provide the incentives necessary to attract privately hauled waste. Further, municipali- ties have institutional and political frameworks already in place to support resource recovery efforts. Put-or-pay" contracts place the responsibility for waste stream control at a level where control is easiest to achieve." the local government. Although interstate agencies face serious problems-creation of public interstate agencies is itself extremely complex and time-consuming—private ventures must overcome serious financial and legal impediments to achieve waste stream control. Interstate regional situations require careful study, and initiation of bistate solid waste authorities must begin as early in the planning process as possible. in general, government unit, fate less complex and severe problems in attaining waste stream control than those confronted by private organizations. The level of government, local or state, empowered to enact mandates and able to provide incentives should be assigned the responsibility for waste stream control. 33 ------- 34 ------- 4. PLANNING TO CONTROL WASTE FLOW Securing an adequate supply of MSW is only one of several elements important to determining the success or failure of a resource recovery project. Other important criteria are: 1. Availability of markets for recovered energy and materials 2. Reliability of technologies 3. Political and environmental acceptance 4. Economic feasibility compared with cost of alternative disposal options 5. Availability of financing 6. Public acceptance of the project. The success of a project depends upon careful analysis of and attention to each of these areas. Comprehensive planning, initiated at an early stage and conducted properly, can ensure adequate supplies of waste for a facility. Guaranteeing waste supply early in a project has several advantages. For example, operating a facility at capacity improves the financial outlook of the project and increases the attractiveness to investors of facility bonds. There are several important considerations in planning to achieve waste stream control. For example, a facility should be designed to process a given, assured quantity of waste. Trying to secure sufficient waste to supply the requirements of a facility with a preconceived design capacity complicates waste stream control efforts. Government units with authority to control waste flow should be included in the planning process as early as possible to take advantage of their ability to overcome problems associated with achieving control. If a facility is economically competitive, contracts or mandates should be used to obtain 35 ------- legal control of waste quantities. This assurance of supply increases the attractiveness of the project to investors. There are four basic steps to achieving waste stream control: 1. Analysis of Existing Situation. The current waste management system should be studied to determine: - public and private collection and disposal practices public and private collection and disposal costs alternate disposal options potential for source separation and recycling waste generation rates. 2. Institutional Analysis. State constitution and local rules and regulations should be studied to determine the levels of government that have: - power to enact waste control mandates authority to levy taxes (user fees) for disposal services authority to enforce environmental regulations, including permitting of solid waste disposal sites control over economic resources sufficient to support a facility. 3. Waste Control Strategy Development. A waste control strategy can be designed specifically to address the local situation, based on the analysis of the existing situation and the scope of authority of the implementing organization. Again, the organization identified as able to implement waste control most easily should be included in the planning process. 4. Waste Control Strategy Implementation. Mandates should be enacted, contracts negotiated, and/or procedures to provide incentives developed. Once the waste control strategy is underway, facility design, financing, and construction phases can begin. 36 ------- Operators within the exi^rfro ... e management system arid representatives of the private sector are crucial m eh® «, the success of any resource recovery project. Discussions with haulers and oth„3 in the ^ community throughout the pUming ptocess ca„ ln achieving waste stream control and r3n j,0i n help ensure cooperation in implementing the program. Achieving control over waste stream flow does not guarantee the success of a facility; however, it improves a facility's chances for success and increases the financial attractiveness of the project. Careful planning in the early stages of project development can help ensure that waste stream control is achieved in most situations. 37 ------- 38 ------- GLOSSARY Antitrust. Opposing or concerned with the regulation of trusts, cartels, or similar business monopolies. These anti-competitive activities are controlled under the Sherman Act. Contract. A waste stream control method involving a contractual agreement for the delivery of a specified quantity of waste between a facility owner or operator and the party having control over that waste (usually a municipality). Contract Collection. Collection service provided by a private firm operating under a contract with a governmental unit. Under this approach, the contractor owns the equipment and must meet all performance criteria established by the contract. Such contracts are usually awarded on the basis of competitive bidding. Franchise Collection. Collection service provided by a private firm operating under an exclusive franchise whereby it is licensed to operate alone in a given area. Typically, each residence served is billed directly by the private firm. A franchise may or may not be awarded on the basis of competitive bidding. Incentive. A waste stream control method that involves actions counteracting existing economic conditions so as to make delivery of waste to the desired facility more attractive to waste generators and/or haulers. Mandate. State legislation or a local ordinance directing (or authorizing an agency to direct) that all waste generated in a given area be delivered to a designated disposal facility. Mixed Load. A load of refuse that has been collected from residences or commercial establishments in two or more political jurisdictions. Municipal Solid Waste. The combined residential and commercial waste material generated in a given municipal area. The collection and disposal of these wastes are usually the responsibility of local government. Put-or-pay. A contractual provision requiring a party (usually a municipality) to deliver a specified quantity of solid waste during a specified time period to a designated facility or pay a penalty. 39 ------- GLOSSARY (Continued) Refuse-derived Fuel (RDF). A solid fuel obtained from municipal solid waste as a result of a mechanical process, or sequence of operations, which improves the physical, mechanical, or combustion characteristics compared to the unprocessed solid waste. Resource Recovery. The extraction and utilization of materials and/or energy from a waste stream. Solid Waste. Discarded solid materials. Source Separation. The segregation and collection of individual recyclable components before they become mixed into the solid waste stream. Waste Flow/Waste Stream Control. Authority or influence to regulate, direct or otherwise ensure that solid waste generated within a given area is disposed of at a designated facility. Waste Stream. A general term used to denote the waste material output of an area, location, or facility. 40 ------- APPENDIX A: Discussion of Legal Issues Raised by the Akron, Ohio, Waste Control Ordinance ------- 1. BACKGROUND Akron's Recycle Energy System (RES) is an RDF/dedicated boiler system with a capacity of 1,000 tons per day (TPD). A refuse-derived fuel (RDF) is prepared from MSW and burned in semi-suspension in a boiler specifically designed for (or "dedicated" to) that purpose. During the winter of 1980-81, the steam produced by the boiler supplied 100 percent of the demand of a steam loop serving downtown Akron. Recent problems, particularly with the pneumatic handling systems, have required a major project reorganization. Tri-Cil, Ltd., operator of a facility in Hamilton, Ontario, has replaced the original operator (Teledyne National) and plant modifications are being made, including the removal of all pneumatic separation and conveying equipment. The project was designed to serve the City of Akron, Ohio, and Summit County, Ohio, where approximately 1,300 tons of municipal solid waste (MSW) per day is generated. This waste is collected by City-owned and operated vehicles, private haulers under contract to the City, and private haulers directly under contract to commercial and industrial generators. In the late 1960s, officials of Akron and Summit County foresaw a shortage of disposal capacity based upon two factors: 1. The introduction of stringent environmental regulations placing substantial limits on the location and operation of future waste disposal sites. 2. The rapid filling of the only sanitary landfill in the County. City and County waste management officials responded by initiating studies of alternatives to land disposal. In the meantime, the City opened a new land- fill on land it owned in the County. Lawsuits filed by nearby residents resulted in an agreement that the new landfill would be operated for a maximum of 5 years, with a 3-year extension if site operations were carried out in accordance with all applicable regulations. A-l ------- In 1971, Ohio Edison petitioned the Public Utilities Commission of Ohio (PUCO) to abandon its steam heat system in Akron for financial reasons. Ohio Edison, faced with the need for substantial new capital to meet increasingly- stringent air pollution requirements, maintained that operating the system was an economic burden. PUCO denied the petition. Also in 1971, a feasibility study of a waste-to-energy system was completed. The City's administration took the report under advisement in 1972, and in November the City Council passed a resolution inviting proposals from engineering firms interested in the project. In April, 1973, a consult- ing engineering firm, Glaus, Pyle, and Schomer, was retained to design a "Recycle Energy System" (RES). In December, 1974, plans and specifications were finished and bids on construction contracts were solicited. By February, 1975, bids on all construction contracts had been received. Beginning in March, 1975, the City bond counsel and other financial con- sultants began preparing plans to finance the project. One element recognized as crucial was obtaining sufficient quantities of MSW needed to supply the specified quantity ana quality of steam over the bond period. By mid-1975, underwriters informed the City that the proposed RES bonds were not market- able. The City then turned to the Ohio Water Development Authority (OWDA) to finance the project. OWDA agreed, and construction contracts were let by September, 1975. In November, 1975, OWDA determined that since the City could not secure the OWDA bonds from its general funds, the financing plan had to be restruc- tured. Dillon, Read, and Co. were retained in 1976 and agreed to head a new underwriting team to purchase and resell the OWDA's RES bonds. The refinanc- ing arrangement made the bonds more marketable by renegotiating the steam contracts to provide stronger long-term guarantees. Under this arrangement, a $10 million project contingency fund was created to cover cost overruns. The contingency fund comprised $5 million from Akron general obligation bonds and $5 million from the County's general obligation money. Teledyne National was hired to operate the facility in November, 1976, and construction began in December of the same year. A-2 ------- To secure refinancing, the City, the County, and the OWDA entered into a cooperative agreement. The cooperative agreement addressed two very important issues: 1. Neither the City nor the County would own or operate another MSW disposal site if OWDA determined that such activity would prove detrimental to the RES project. 2. "For the Term of this Agreement, the (City of Akron) shall require that all collectors and haulers of solid waste within the (City of Akron) be licensed, . . . and all such licenses shall provide that all collectors or haulers of solid waste shall dispose of all solid waste generated within the corporate limits of the (City of Akron) which is acceptable for disposal by the project to be delivered to the project for disposal . . [Section 5.5(1) of the Cooperative Agreement]. On October 4, 1976, the Akron City Council passed an ordinance requiring that all waste generated within the city limits of Akron be taken to a place designated by the proper city official. The ordinance was enacted to fulfill the obligations set forth in the cooperative agreement. Lawsuits were brought against the City of Akron by waste haulers, local landfill operators, and recyclers on the grounds that the ordinance was unconstitutional and violated antitrust laws. In 1979, the ordinance was upheld by the U.S. District Court, Glenwillow Landfill, Inc., et al., v. the City of Akron, 485 F.Supp. 571 (N.D. Ohio 1979), and the suit dismissed. On subsequent appeal to the U.S. District Court of Appeals, Sixth Circuit, the decision was reaffirmed in July, 1981, Hybud Equipment Corp., v. the City of Akron, 654 F.2d 1187 (6th Cir. 1981). However, in February, 1982, the U.S. Supreme Court vacated the latter decision and returned the case to the Appeals Court for reconsideration in light of a Supreme Court ruling in a related case, Community Commnications, Co., Inc., v. City of Boulder, Colorado, et al., 102 S.Ct. 382 (1982). 2. LEGAL ISSUES RAISED BY ORDINANCE The following discussion addresses the legal issues raised by the Akron ordinance and the decision handed down by the U.S. District Court and U.S. A-3 ------- Court of Appeals. In addition, the U.S. Supreme Court decision in Community Communications v. Boulder and its potential impact on the outcome of the Akron case is discussed. The plaintiffs (the haulers, landfill owners, and recyclers) in the District Court case (.referred to as the Glenwillow decision) alleged that certain parts of the cooperative agreement and the ordinance were illegal because: 1. They violated the sections of the Sherman Antitrust Act. 2. They restrained interstate commerce in violation of the Constitution. 3. They deprived the plaintiffs of due process of law under the 14th amendment to the Constitution. 4. They took property in violation of the 5th Amendment to the Constitution, as applied by the 14th Amendment. The court ruled on the Sherman violations before considering the constitu- tional issues. 2.1 SHERJMAN ANTITRUST ACT It was argued that ordinances to control waste ownership and flow would do economic harm and damage to private landfill operators, recyclers, and waste haulers in the Akron area. The ordinances would also displace free enterprise competition within the hauling and disposal industries. Therefore, the waste control ordinance was vulnerable to attack as a violation of the Sherman Antitrust Act because it may have constituted an unlawful, anti- competitive action on the part of the implementing organization (Akron, Ohio). In order for a waste control ordinance to be found in violation of the Sherman Act, three conditions must be fulfilled: 1. The ordinance must be sufficiently connected with interstate commerce to permit application of Federal statutes. A-4 ------- 2. The ordinance must constitute an anticompetitive practice as defined by antitrust law. 3. The municipalities must be unable to claim "state action immunity." If all three of these conditions were met, the ordinance would be in violation of Federal antitrust laws. 2.1.1 Interstate Commerce To justify application of the Sherman Antitrust Act, waste control ordinances must displace competition in the local market so that interstate commerce is affected to a sufficient degree. In J.P. Mascura and Sons v. Wm. J. O'Hara, Inc., F.2d 264 (3d Cir. 1977), antitrust violations were found to exist, even though it was found that all parties of concern operated entirely within the Commonwealth of Pennsylvania. The action alleged that price-fixing and a conspiracy to allocate territories to waste haulers and landfill opera- tors in suburban Philadelphia were in violation of Sherman Antitrust provi- sions. The conclusion that the alleged practices substantially affected interstate commerce was based on two factors: 1. The quantity of equipment manufactured out-of-State purchased by refuse haulers in the affected area would be decreased by a conspir- acy to restrict local competition; the fact that all equipment in use had been purchased from local dealers did not negate the relationship of this issue to interstate commerce. 2. Customers serviced by these haulers had out-of-state headquarters, from which the haulers received payment for local services. The court decided that, as a matter of economic reality, the amounts of these out-of-state payments would be affected by a reduction in competition. There- fore, Federal antitrust laws were found to apply. 2.1.2 Anticompetitive Activity According to Mascuro, any connection with interstate commerce, however vague, would justify the application of antitrust laws. For example, purchases of equipment, insurance, etc., from companies with out-of-state A-5 ------- headquarters have been shown (in Mascuro) Co be a sufficient connection to interstate commerce. Since out-of-State suppliers of equipment and purchasers of recycled goods were involved in the RES project, the first criterion of antitrust law violation was met, even though the ordinance regulated only waste generated in a very limited area. The argument that controlling waste flow is an anticompetitive practice centers around two basic theories: 1. Ordinances restricting disposal alternatives are monopolization of the waste disposal business. 2. Cooperative agreements or ordinances are devices to restrain trade. Unlawful monopolization under the Sherman Act has been defined to consist of the possession of monopoly power in the market, plus the intent to acquire or use that power. Capture and exclusive use of a waste stream would, in effect, create a monopoly for the municipality and/or the resource recovery facility, since this situation would effectively prevent any competing disposal sites from acquiring waste. Capture of the waste stream might also be challenged as a restraint of trade. It can be argued that cooperative agreements between organizations are evidence that a conspiracy exists to restrain trade in solid waste collection and disposal. "Tying" arrangements, in which hauler licenses are granted only if the hauler agrees to use a city-designated facility, can also be inter- preted as restraints of trade. In this light, both capture of the waste stream and "tying" arrangements meet the second condition of antitrust law violation. The Akron waste stream control ordinance met the first two criteria for antitrust law violations: the ordinance had sufficient impact upon interstate commerce to allow the application of Federal antitrust laws; and since the ordinance did, in fact, create a monopoly over solid waste industry in the local market, it was therefore interpreted as a restraint of trade. A-6 ------- 2.1.3 "State Action" Immunity In order that the waste control ordinance remain in force and not violate antitrust laws, the enacting organization must be excluded from application of the antitrust laws under the "state action" exemption. In examining the Akron situation, the U.S. Court of Appeals, Sixth Circuit (hereafter refered to as the Appeals Court), found that: 1. The OWDA is a State agency, and its power to determine State policy in solid waste management, including the issuance of revenue bonds for facilities like the RES, is supreme. 2. The State has a legitimate interest in promoting safe and sanitary methods of solid waste disposal and therefore, also can legitimately provide financial aid to its subdivision (OWDA) in support of these goals. 3. By entering into the Cooperative Agreement, the OWDA was acting for the State under express statutory authority to further State policies for safe and secure disposal of MSW. Based on these three findings, the court held that the OWDA and its activities are outside the jurisdiction of the Sherman Act and fall under the "state action exemption." The court used two previous decisions as a basis for this judgment: 1. Parker v. Brown, 317 U.S. 341 (1943), in which the Supreme Court ruled that activities of a state agency at the legislative command of the State are exempt from regulation under the Sherman Act. 2. Bates v. State Bar of Arizona, 433 U.S. 350, 359-63 (1977), in which the Supreme Court used three criteria to determine justification for a State action exemption: - The defendant was the State and not a private party. - The State had an interest in protecting the public by acting in the situation of concern. - The action taken in the situation of concern was clearly in keeping with the State's policy. A-7 ------- 3ecause Che OWDA met all Che requirements sec forch in BaCes and Parker, Che Appeals Court held Chac Che state accion exemption applied. The CourC also ruled ChaC Che scaCe accion exemption exCended Co che Cicy of Akron. The home rule powers provision of che Ohio ConsciCuCion declares ChaC cicies acC as agenCs of che Scace when chey exercise governmental powers within cheir cicy Limics. The Ohio courcs have furcher ruled ChaC local governmenc are responsible for regulating solid wasce management wichin cheir borders—by monopoly, if ic is appropriace. Since Ohio has recognized chac municipalicies may choose Co provide wasCe disposal services on a monopoly basis, and since StaCe policy is Co allow local governments Co sec policy wichin Cheir boundaries, che accions of che Cicy are procecced under che scace accion exempCion. Ic is chis aspecc of che Appeals CourC opinion ChaC must be reconsidered in lighc of Che Supreme CourC's decision in Communicy Communicacions v. Boulder. The Supreme CourC ruled chac, in order for a subdivision Co benefic from a sCaCe's ancicrusc immunicy, Che ancicompecicive accion — such as a wasCe scream conCrol ordinance — muse be pursuanC Co a clearly arCiculaCed and affirmacively expressed scace policy and che accion musC be acCively supervised by Che sCate. Until the licigacion in Hybud is compleCed, ic is uncercain what will be acceptable as "clear articulation and affirmative expression" and "active state supervision" regarding a state policy directing a subdivision to displace competition with regulation or monopoly public service. In Akron's case, it appears that OWDA's role may be satisfied through the Cooperative Agreement with OWDA, a State agency, which specifi- cally directed the City of Akron to carry out measures to ensure that all waste generated within the corporate limits of Akron be delivered to RES. 2.2 COMMERCE CLAUSE The commerce clause of Che Constitution gives Congress the power to regu- late commerce between the states. To determine wheCher an ordinance violaces Che commerce clause, three criteria must be met: 1. The statute must regulate evenhandedly, with only incidental effects on interstate commerce? A-8 ------- 2. The statute must serve a legitimate local purpose? 3. There must be no alternate means of supporting this local purpose without restricting interstate commerce? Previous decisions [e.g., Philadelphia v. New Jersey 1137 U.S. 617 (1978); Hughes v. Oklahoma, 99 S. Ct. 1727, (1979)] have found that the statutes judged unconstitutional attempted to supersede state boundaries. In Philadelphia, the State of New Jersey enacted regulations to restrict the disposal of waste generated in Philadelphia in landfills in southern New Jersey. The regulations were judged as violating the commerce clause. In Akron, the ordinance affected only solid waste generated within the City; therefore, the Akron ordinance effects only intrastate activities, and any effect on interstate commerce is indirect. Moreover, since the ordinance affects only solid waste, any burden on interstate commerce in recyclable goods moving between states is indirect and incidental. In addressing the second criterion, the court in Glenwillow determined that the waste control ordinance served a legitimate purpose by enabling construction of a resource recovery facility and thereby assuring the safe and efficient disposal of solid waste generated within the City. Finally, the court in Glenwillow did not accept the plaintiffs' argument that the City could ensure waste flow by making it economically advantageous for haulers to use the facility. Although the City had considered offering economic incentives as a means of ensuring the flow of waste, it eventually determined that the ordinance would provide a guaranteed supply of waste to the facility. The court upheld this decision and ruled that activities designed to make a facility more economically attractive do not constitute an alternative to mandates. In this case, since each of the three criteria was met, the Akron ordinance was found not to be an impermissable burden on interstate commerce. A-9 ------- 2.3 DUE PROCESS The Constitution guarantees due process and equal protection under the law, and that no property will be taken without just compensation. In Glenwillow, the plaintiffs argued that: the waste control ordinance was not sufficiently related to legitimate government objectives to meet the require- ments of due process, and even if the ordinance does serve a legitimate public purpose, it in effect takes their property without just compensation. In deciding on the first argument, the court had to determine whether the waste control ordinance, as a function of the City's police powers was directly related to health, welfare, and safety of the residents. Akron argued that the health, welfare, and safety of the citizens were fhe factors motivating construction of the facility. The City based its arguments on three facts: 1. Health and safety are of immediate concern in landfill operations. 2. Health and safety concerns required the City to operate a municipal disposal facility to discourage open and random dumping. 3. Concern for public welfare required the City to pursue an alternative to landfilling because of increased difficulties in locating and purchasing new sites. The plaintiffs argued that the ordinance was enacted to promote narrow, private financial interests without a proper public purpose. The court decided that, based upon Akron's demonstrated difficulty in finding new and environmentally safe landfill sites, the chronology of events, and recommendations for studies of alternative disposal options, the City's motivation for building the facility was not to advance private enterprise or undertake proprietary activity. In addition, the court decided that the involvement of private enterprise in the project (i.e., operator, bond counsel, etc.) does not negate governmental concerns for the health and safety of the population, and that the public, not the operator of the resource recovery facility, would be the true beneficiary of the project and the ordinance. Therefore, the mandate to regulate the flow of solid waste was hela to be a legitimate use of Akron's police powers. A-10 ------- Finding Chat a legitimate public purpose for the ordinance existed, the court had to determine whether the ordinance in fact authorizes taking property for public use without just compensation. To decide this issue, the court had to consider separately the effects on haulers and the effects on landfill operators or other disposal facilities. Haulers claimed that the waste constituted a valuable property to which they gained title when they collected it. Mandatory disposal at a facility where tipping fees might be higher than those at alternate sites was an unconstitutional appropriation of valuable material. To demonstrate that the waste had been taken from them without just compensation, the haulers were required to show that the waste they collected had some value. In Glenwillow, the court ruled that the waste control ordinance took nothing of value from the haulers and that it only removed from the haulers the "right" to decide where the waste should be disposed. The haulers had expected that they would always have the right to select a final disposal site. The court ruled this "expectation" was not a property right covered under the Constitution, that expectations are not a legitimate claim of entitlement, and that, therefore, waste control ordinances do not deprive haulers of property without compensation. In determining whether landfill or reclamation operators have property rights violated by the waste control ordinance, the court used the same rationale as in the ruling applying to haulers. The recycler and landfill operator expected that waste would continue to be brought to their facilities by haulers. This expectation was found not to be a legitimate claim of property right or entitlement in need of protection. The waste ordinance did not violate constitutional right to compensation. Therefore, landfill operators/owners who lose waste to a resource recovery facility as a result of mandated control are not deprived of any property. A-ll ------- 3. SUMMARY In upholding the waste control ordinance on constitutional issues, the Appeals Court in Glenwi1low decided that: 1. The ordinance affects only waste generated within the City of Akron and does not restrain interstate commerce. 2. The effect on recyclable materials is only indirectly related to the ordinance. 3. . The ordinance serves a legitimate local purpose (the safe disposal of solid waste). 4. Economic means of controlling waste flow do not constitute viable alternatives to mandated waste control. 5. Mandates are a legitimate use of police powers to assure the health, safety, and welfare of the population. 6. Support of a resource recovery facility as a result of difficulty in siting safe landfills does serve the public welfare. 7. Mandates that designate disposal sites do not infringe on any legitimate property rights of waste haulers. 8. Mandates that direct waste away from recycling or landfill operations do not infringe on any legitimate property rights of owners/operators of those facilities. The Appeals Court is reconsidering this decision in light of the Supreme Court opinion in Community Communications v. Boulder which limits the exten- sion of the "state action" immunity from antitrust law to municipalities. The Appeals Court must decide whether the ordinance enacted pursuant to the cooperative agreement with OtoDA presents a "clearly articulated and affirma- tive expressed" State policy and whether it has been actively supervised by the State through OWDA. A-12 ------- APPENDIX B: Syllabus of Community Communications Co., Inc., v. City of Boulder, Colorado, et al. ------- (Slip Opinion) NOTE: Where it is feasible, a syllabus fheadnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court out has been pre- pared by the Reporter ox Decisions for the convenience of the reader. See United States v. Detroit Lumber Co.. 200 U. S. c2l. 337. SUPREME COURT OF THE UNITED STATES Syllabus COMMUNITY COMMUNICATIONS CO., INC. v. CITY OF BOULDER, COLORADO, ET al. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT No. 80-1350. Argued October 13, 1981—Decided January 13, 1982 Respondent city of Boulder is a "home rule" municipality, granted by the Colorado Constitution extensive powers of self-government in local and municipal matters. Petitioner is the assignee of a permit granted by a city ordinance to conduct a cable television business within the city lim- its. Originally, only limited service within a certain area of the city could be provided by petitioner, but improved technology offered peti- tioner an opportunity to expand its business into other areas, and also offered opportunities to potential competitors, one of whom expressed interest in obtaining a permit to provide competing service. The City Council then enacted an "emergency" ordinance prohibiting petitioner from expanding its business for three months, during which time the Council was to draft a model cable television ordinance and to invite new businesses to enter the market under the terms of that ordinance. Peti- tioner filed suit in Federal District Court, alleging that such a restriction would violate § 1 of the Sherman Act, and seeking a preliminary injunc- tion to prevent the city from restrictingpetitioner's proposed expansion. The city responded that its moratorium ordinance could not be violative of the antitrust laws because, inter alia, the city enjoyed antitrust im- munity under the "state action" doctrine of Parker v. Brown, 317 U. S. 341. The District Court held that the Parker exemption was inapplica- ble and that the city was therefore subject to antitrust liability. Ac- cordingly, the District Court issued a preliminary injunction. The Court of Appeals reversed, holding that 'he city's action satisfied the cri- teria for a Parker exemption. Held: Boulder's moratorium ordinance is not exempt from antitrust scru- tiny under the Parker doctrine. Pp. 6-15. (a) The ordinance cannot be exempt from such scrutiny unless it con- I B-l ------- n COMMUNITY COMMUNICATIONS CO. y. BOULDER Syllabus stitutes either the action of the State itself in its sovereign capacity or municipal action in furtherance or implementation of clearly articulated and affirmatively expressed state policy. Pp. 6-10. (b) The Parker "state action" exemption reflects Congress' intention to embody in the Sherman Act the federalism principle that the States possess a significant measure of sovereignty under the Federal Constitu- tion. But this principle is inherently limited: Ours is a "dual system of government," Parker, su-pra, at 351, which has no place for sovereign cities. Here, the direct delegation of powers to the city through the Home Rule Amendment to the Colorado Constitution does not render the cable television moratorium ordinance an "act of government" per- formed by the city acting as the State in local matters so as to meet Parker's "state action" criterion. Pp. 10-12. (c) Nor is the requirement of "clear articulation and affirmative ex- pression" of a state policy fulfilled here by the Home Rule Amendment's "guarantee of local autonomy," since the State's position is one of mere neutrality respecting the challenged moratorium ordinance. This case involves city action in the absence of any regulation by the State, and such action cannot be said to further or implement any clearly articulated or affirmatively expressed state policy. Pp. 13-14. (d) Respondents' argument that denial of the Parker exemption in this case will have serious adverse consequences for cities and will unduly burden the federal courts is simply an attack upon the wisdom of the longstanding congressional commitment to the policy of free markets and open competition embodied in the antitrust laws, which laws apply to municipalities not acting in furtherance of clearly articulated and affir- matively expressed state policy. Pp. 14-15. 630 F. 2d 704, reversed and remanded. Brennan, J., delivered the opinion of the Court, in which Marshall, Blackmun, Powell, and Stevens, JJ., joined. Stevens, J., filed a concurring opinion. Rehnquist, J., filed a dissenting opinion, in which Burger, C. J., and O'Connor, J., joined. White, J., took no part in the consideration or decision of the case. B-2 ------- APPENDIX C: Project Summaries ------- AKRON, OHIO Technology: Capacity: Produce: Capital Cost: Principals: F inance: Waste Stream Control: Status: RDF dedicated boiler 1,000 TPD design Steam feeding downtown steam loop, recovered ferrous $34.2 million direct construction $17.4 million design, legal fees, construction management $ 5.2 million start-up/shakedown $56.8 $16.4 million new guaranteed capital by new operator and principals for modifications. City of Akron, OH - owner, primary supplier of MSW; contributed $5 million in GO bonds. Teledyne National - operator (recently replaced by Tri-Cil, Ltd.). Dillon, Read & Co. - bond underwriter. Ohio Water Development Authority (OWDA) - principal financier of project, with $16 million in revenue bonds. Summit County, Ohio - third party in project financial arrangement, with $5 million in GO bonds. $46 million revenue bonds $10 million general obligation bonds ($5 million—City of Akron; $5 million—Summit County). Ordinance requiring that all waste generated within boundaries of city of Akron be disposed at the RES. Ordinance enacted at urging of underwriters to improve salability of bonds. Ordinance also required by terms of Cooperative Agreement among City of Akron, Summit County, Ohio, and OWDA, which provided financing for project. In financial difficulty because of (1) problems associ- ated with pneumatic handling system and (2) need for low tipping fee to attract waste from County. New financing arrangements among the City, OWDA, and Tri-Cil, Ltd., of Canada, the new operator, call for the City to provide $8.6 million, OWDA $16.4 million, and Tri-Cil, Ltd., a large electric turbine giving the facility electricity production capability. Plans call for the RES to shut down for approximately 1 year to replace the pneumatic system and install the turbine. Waste will be landfilled, and natural gas will be used to fire the steam-producing boilers. C-l ------- SAUGUS, MASSACHUSETTS Technology: Capacity: Product: Capital Cost: Principals: Finance: Revenues: Waste Supply: Waste Control: Comment: Mass-burning waterwall incinerator (modified Von Roil process). 1,200 TPD (Design); 1,500 TPD (Maximum). Steam (625 psig; 7S5-825°F); Average 300,000 lb/hr; maximum 370,000 lb/hr. Recovered metal from bottom ash (approx. 50 TPD). $38 million. Owned by Town of Saugus, Massachusetts Designed/built by Rust Engineering (subsidiary of Wheelabrator-Frye, Inc.); Finance-approved, construction-managed, and now operated by RESCO (joint venture of Wheelabrator Systems, Inc., and M. DeMatteo Construction Co.). $10.5 million from each RESCO partner ($21 million total); $30 million industrial revenue bonds; Leverage lease arrangement between Saugus and RESCO. $13 million over construction costs ($35 million) for working capital, bond contingency fund, start- up and equipment replacement/improvement. $16/ton tipping fee; Steam and ferrous metal sales. 18 municipalities currently send 1,150 TPD of MSW to Saugus. Long-term "put-or-pay" contracts with 13 "core" communities; shorter-term contracts with two Boston refuse collection districts and other towns and private haulers. Contracts attractive because of guaranteed capacity, short transport distance, competitive tipping fee, lack of alternative disposal sites. Saugus, Massachusetts, is currently seeking additional guaranteed waste streams. The facility is showing a profit after 5 years of operation. The commitment of the RESCO partners to providing additional funds to address equipment problems and to assuming a major share of the risks was a major determinant of project C-2 ------- success. Only concern is that "put-or-pay" contracts allow for 10% reduction of waste commitments/year, and municipalities can start own recycling program and still fulfill terms of contract. C-3 ------- BRIDGEPORT, CONNECTICUT Technology: Capac ity: Produc t: Capital Cost: Principals: Finance: Waste Supply: Waste Control: Comment: Refuse-derived fuel (RDF)-producing facility using shredding, magnetic separation, air classification, trommelling, and ball milling, plus chemical additives to produce powdered fuel. 1,800 TPD (Design) 2,200 TPD (Maximum) Eco-Fuel II - powdered RDF (7,750 btu/lb); Ferrous Metals; Aluminum; and G1ass. $53 million. Owned by Connecticut Resources Recovery Authority (CRRA); designed/operated by Combustion Equipment Associates, Inc., and Occidental Resource Recovery Associates (CEA-OXY). Greater Bridgeport systems bonds (revenue bonds) through CRRA. 9 cities in area supplying 1,200 TPD to the facility. Although CRRA is a State agency, it has no control over waste flow. "Put-or-pay" contracts were signed with nine local communities under interlocal agreement. Agreement guaranteed only 1,200 TPD of waste to the facility. Extensive regional transfer station system would supply remaining quantities of waste. The Bridgeport facility is currently (March 1982) shut down. CEA filed for bankruptcy in November, 1S80, shortly after start-up. Occidental has taken over the facility and has proposed modifications to produce shredded RDF. C-4 ------- LAKELAND, FLORIDA (Proposed) Technology: Capacity: Product: Capital Costs (projected): Principals: F inance: Waste Supply: Waste Control: Comment: RDF-producing facility for supplemental firing in on-site boiler, generating electricity. 300 TPD. Coarse RDF for use as supplemental fuel in electricity generating plant. $186 million (RDF-processing facility—$5 million; boiler facility, pollution control, and electrical generating equipment and land). RDF facility designed by Horner and Shifrin, Inc. Operated by City of Lakeland; owned jointly by City of Lakeland (60%) and Orlando Utilities Commission (40%). Municipal revenue bonds. Approximately half from City of Lakeland, half from private haulers. City of Lakeland municipal collection services and incentives. The City expects few problems in obtaining necessary supplies of waste from private haulers. The facility will drastically reduce transport distances and haul times, and tipping fees will be competitive. Tipping fees at the local landfill were $6/ton until the site was forced to upgrade to meet environmental regula- tions. New tipping fees are projected to be between $10 and $12/ton. C-5 ------- NEW HAMPSHIRE/VERMONT SOLID WASTE PROJECT (Proposed) Technology: Capac ity: Product: Principles: Waste Supply: Waste Control: Comments: Mass-burning facility (modular). 225 TPD. Steam. 11 communities in Vermont; 15 communities surrounding Claremont, New Hampshire. Most waste is either privately hauled or self-hauled. Projected "put-or-pay" contracts. This interstate project needs to create a bistate solid waste district: first, the proposal must be studied and approved by individual state commissions; identical authorizing legislation must be approved by both State legislatures, subject to approval by referendum, and then approved by U.S. Congress before project implementation. As of July, 1982, both State legislatures had acted and congressional approval is expected by September. C-6 ------- |