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#307 - New Garbage Strategies Now Possible, 13-Oct-1992

The garbage situation in the U.S. has changed considerably during the
past two years. The new situation offers opportunities to grass-roots
activists seeking to discourage waste.

THE BASIC FACT IS, THE PRICE OF TRASH DISPOSAL IS DROPPING

Philadelphia and Cleveland recently hammered out new long-term garbage
contracts that lower their costs 20%.[5] Philadelphia's 1988 garbage
contract with Waste Management, Inc. locked the city into $67 per ton
through 1994. But in March, 1992, Philly signed new contracts for the
years 1995-2001 at $50 per ton.[5] Boston recently received bids for
the city's garbage disposal at $50 per ton instead of the previous
year's $70 per ton, a 28% price drop.[5] Pittsburgh's contract with
Chambers Development is up at the end of 1993 and Pittsburgh officials
expect to get a new contract at a price "the same or better" then the
1993 price of $38.17 per ton.[5]

BUT COMMUNITIES WITH INCINERATORS ARE LOCKED INTO HIGH PRICES THEY
OFTEN CAN'T AFFORD

Two Long Island communities--Babylon and Huntington--acted last week to
shore up the fiscal stability of their incinerators. Each town had paid
roughly $200 million to build its incinerator, and now neither town can
keep up the payments on the debt. This past week, the NEW YORK TIMES
reports, the town of Huntington almost missed its payroll because it
had diverted operating monies to cover its debt payments.[2] Huntington
officials voted to impose a fee increase of $170 per year on each
family in the town--the second increase this year. Earlier the town had
imposed a $500 per year increase on residents living in certain parts
of the community.[2]

To bail itself out, Babylon took another approach. It signed a 20-year
agreement with neighboring community North Hempstead, locking Babylon
into accepting 60,000 more tons of trash each year at $84 per ton, with
an annual price-increase of 4%.[2]

The two Long Island towns are not the only ones facing these problems.
As the NEW YORK TIMES put it, "Incinerators throughout the Northeast,
from Essex County, N.J., to Washington County in upstate New York, have
found themselves unable to attract enough trash because landfills in
other parts of the country are charging as little as one-sixth as
much."[2]

There are 4 main reasons why the price of trash disposal is dropping, 2
temporary, and 2 permanent.

First the temporary reasons:

THE NATION'S LINGERING ECONOMIC DECLINE HAS REDUCED THE OUTPUT OF TRASH
FROM THE COMMERCIAL AND INDUSTRIAL SECTORS. Presumably this will change
in the future.

And: FEDERAL SOLID-WASTE REGULATIONS ARE ABOUT TO FORCE THE CLOSURE OF
SEVERAL THOUSAND SMALL LANDFILLS IN THE NEXT TWO YEARS. THESE SMALL FRY
ARE ACCEPTING WASTES AT FIRE-SALE PRICES.

And the longer-term reasons:

THE BIGGEST WASTE HAULERS HAVE BUILT MORE LANDFILL CAPACITY THAN THE
NATION NEEDS

Browning-Ferris owned 600 million cubic yards of unused capacity in
1984. They tripled that, to 1.7 billion cubic yards, in 1991, and plan
to nearly double that again, to three billion cubic yards, by the year
2000. According to estimates by EPA [U.S. Environmental Protection
Agency], that will represent a 10-year supply for the nation as a
whole. And that's just one company. Waste Management, Inc. won't say
how much capacity its 130 dumps represent, but the WALL STREET JOURNAL
estimates that it ranges from 650 million to a billion tons.[5] "Who's
going to fill up all these dumps," asks Douglas Augenthaler, a
financial analyst with the Wall Street firm Oppenheimer, and noted for
conducting his own research, not merely accepting companies' words.[1]

RECYCLING AND WASTE REDUCTION HAVE BEGUN TO CUT INTO THE AVAILABILITY
OF TRASH. Some towns are now achieving a 73% recycling rate, and other
towns have instituted a pay-per-bag garbage plan that has got people
focused on buying things differently, to reduce their personal wastes
and thus their personal costs.[6],7

As a result, some financial analysts are predicting that even the
largest and wealthiest waste-hauling companies will not be able to
maintain the high returns on investment they maintained throughout the
'80s. In short, the big garbage haulers are in trouble.

ANOTHER FACTOR DRIVING DOWN THE COST OF TRASH DISPOSAL IS THIS: MANY
PUBLIC OFFICIALS HAVE REALIZED THAT GOVERNMENTS CAN USUALLY MANAGE
WASTE MORE CHEAPLY THAN PRIVATE COMPANIES CAN

The WALL STREET JOURNAL reports that cities are "banding together to
increase public-sector leverage over dump prices, and building new
dumps of their own and expanding old ones to bypass more expensive
private landfills."[5]

Some municipalities know they're paying too much for trash disposal but
can't do anything about it. Morris County, N.J., must pay $131 per ton
for disposal through the end of 1994 in part because it allowed a
single company, Chambers Development Co. of Pittsburgh, to step in four
years ago and gain control of the county's only two disposal outlets.
"That lack of control really costs us," says Glenn Schweizer, the
county's trash czar. "The rates are excessive."[5]

In the early 1980s, Delaware voluntarily raised its trash disposal
fees, to finance construction of its own dumps in the early 1980s. This
strategy has begun to pay off. In the last few years, neighbor states
reliant on the private sector have been paying more than Delaware's
$43.51 to $49.60 a ton, says N.C. Vasuki, the state's trash chief.[5]

When it comes to managing trash, municipalities have several advantages
over private trash companies. Cities' borrowing costs are often lower,
and they don't pay taxes or look for profits. Furthermore, they can
legislate so-called flow control, which gives them the power to steer
all the trash within their borders to their own dump--a monopoly.

"Anybody who can walk and chew gum on a clear day ought to be able to
beat out the private sector," says H. Lanier Hickman, head of the Solid
Waste Association of North America, a group of mostly municipal waste
officials. "We're learning to compete with the private sector," he
says.[5]

The WALL STREET JOURNAL reports that, "In Los Angeles County, the
nation's largest trash market, and in big Texas cities like San Antonio
and Dallas, officials are fighting to preserve municipal control of
dumps. Losing that control could cost Los Angeles County $350 million a
year in added dump fees, officials estimate.

"Even in Waste Management's back yard, the Chicago area, municipalities
are fighting back. In the northern suburbs, Lake County has essentially
said no to any private-sector dump or incinerator project, and instead
plans to build its own. 'Ownership is key,' to controlling costs,' says
Bill Barron, deputy county administrator."[5]

Finally, the elections next month may bring big changes in the federal
government's attitude toward trash, especially toward incineration.
President Bush, in his national energy strategy, called for a seven-
fold increase in the number of garbage incinerators by the year 2010.
On the other hand, Al Gore, in his book, EARTH IN THE BALANCE, has this
to say about incineration:

THE HUGE NEW INVESTMENT IN NEW INCINERATORS--ALMOST $20 BILLION WORTH--
IS BEING MADE EVEN THOUGH MAJOR HEALTH AND ENVIRONMENTAL CONCERNS HAVE
NEVER BEEN ADEQUATELY ADDRESSED. ACCORDING TO CONGRESSIONAL
INVESTIGATORS, THE AIR POLLUTION FROM WASTE INCINERATORS TYPICALLY
INCLUDES DIOXINS, FURANS AND POLLUTANTS LIKE ARSENIC, CADMIUM,
CHLOROBENZENES, CHLOROPHENOLS, CHROMIUM, COBALT, LEAD, MERCURY, PCBS,
AND SULFUR DIOXIDE...

THE PRINCIPLE CONSEQUENCE OF INCINERATION IS THUS THE TRANSPORTING OF
THE COMMUNITY'S GARBAGE--IN GASEOUS FORM, THROUGH THE AIR--TO
NEIGHBORING COMMUNITIES, ACROSS STATE LINES, AND, INDEED, TO THE
ATMOSPHERE OF THE ENTIRE GLOBE, WHERE IT WILL LINGER FOR MANY YEARS TO
COME. IN EFFECT, WE HAVE DISCOVERED YET ANOTHER GROUP OF POWERLESS
PEOPLE UPON WHOM WE CAN DUMP THE CONSEQUENCES OF OUR OWN WASTE: THOSE
WHO LIVE IN THE FUTURE AND CANNOT HOLD US ACCOUNTABLE.[8]

These facts offer opportunities to activists hoping to discourage
waste.

** The economics of incineration are looking worse than ever.
Incinerator companies and other waste haulers are resorting to
extraordinary accounting measures--"cooking the books" is the way
BUSINESS WEEK4 and FINANCIAL WORLD1 express it--to make themselves
appear as profitable as ever, but these tricks can only fool investors
for so long. Besides, landfilling is much cheaper, and there's plenty
of landfill capacity for the foreseeable future.

** Incinerators require a 20-year commitment to providing a steady
stream of trash, and the modern world seems poised to produce less
trash. Communities that commit to incineration are locked out of a
modern approach to environmental protection based on waste reduction,
waste avoidance and pollution prevention.

** The small dump operators who are selling landfill space at bargain
prices have made people mad because they're filling their dumps with
outsiders' trash. The big new landfills built by BFI, Waste Management,
and Chambers have the same problem: they only make sense financially if
they accept trash from outside the local area. This means there are
ready-made constituencies angry enough to push hard for federal
legislation giving local governments the right to say "no" to
outsider's trash. (See RHWN #299.)

** There is now abundant evidence that local governments are better off
managing their garbage themselves, instead of handing it to private
companies. Communities that lose control of their garbage can be held
hostage. Local control is more flexible and cheaper.

--Peter Montague

=====

[1] Leland Montgomery, "Down in the Dumps." FINANCIAL WORLD June 23,
1992, pg. 30.

[2] Jonathan Rabinovitz, "Costs of L.I. Incinerators Rise With Trash
Shortage," NEW YORK TIMES October 10, 1992, pg. 26.

[3] Teresa Austin, "Waste to Energy? The Burning Question," CIVIL
ENGINEERING (October, 1991), pgs. 35-38.

[4] Julia Flynn and Wendy Zellner, "Burying Trash in Big Holes--on the
Balance Sheet," BUSINESS WEEK May 11, 1992, pgs. [88-89.]88-89.

[5] Jeff Bailey, "Space Available: Economics of Trash Shift as Cities
Learn Dumps Aren't So Full," WALL STREET JOURNAL June 2, 1992, pg. A1.

[6] Editorial, "The price of garbage pickup is in the bag," THE
[BERGEN, NJ] RECORD June 24, 1992.

[7] Editorial, "How to Price Garbage Pickup," TRENTON [NJ] TIMES June
29, 1992.

[8] Al Gore, EARTH IN THE BALANCE; ECOLOGY AND THE HUMAN SPIRIT
(Boston: Houghton Mifflin, 1992), pgs. 156-157.

Descriptor terms: waste disposal technologies; incineration; wmx; bfi;
landfilling; local governments; waste treatment technologies;
economics; bonding; financing; ny; waste hauling industry;