[Senate Hearing 105-72]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 105-72


 
             TRANSPORTATION AND FLOW CONTROL OF SOLID WASTE

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                                   on

 ON THE OVERSIGHT OF LAWS REGULATING THE INTERSTATE TRANSPORTATION OF 
   SOLID WASTE AND TO CONSIDER ENACTING LAWS PROVIDING FOR THE FLOW 
                    CONTROL OF MUNICIPAL SOLID WASTE


                               __________

                             MARCH 18, 1997

                               __________

  Printed for the use of the Committee on Environment and Public Works



                     U.S. GOVERNMENT PRINTING OFFICE
 40-942 CC                  WASHINGTON : 1997 
___________________________________________________________________________
               For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402





               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED FIFTH CONGRESS

                 JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire          DANIEL PATRICK MOYNIHAN, New York
DIRK KEMPTHORNE, Idaho               FRANK R. LAUTENBERG, New Jersey
JAMES M. INHOFE, Oklahoma            HARRY REID, Nevada
CRAIG THOMAS, Wyoming                BOB GRAHAM, Florida
CHRISTOPHER S. BOND, Missouri        JOSEPH I. LIEBERMAN, Connecticut
TIM HUTCHINSON, Arkansas             BARBARA BOXER, California
WAYNE ALLARD, Colorado               RON WYDEN, Oregon
JEFF SESSIONS, Alabama
                   Steven J. Shimberg, Staff Director
               J. Thomas Sliter, Minority Staff Director

                                  (ii)





                            C O N T E N T S

                              ----------                              

                             MARCH 18, 1997

                                                                   Page

                           OPENING STATEMENTS

Allard, Hon. Wayne, U.S. Senator from the State of Colorado......    26
Baucus, Hon. Max, U.S. Senator from the State of Montana.........     5
Boxer, Hon. Barbara, U.S. Senator from the State of California...     6
Chafee, Hon. John H., U.S. Senator from the State of Rhode Island     1
Lautenberg, Hon. Frank R., U.S. Senator from the State of New 
  Jersey.........................................................     3
Reid, Hon. Harry, U.S. Senator from the State of Nevada..........     5
Sessions, Hon. Jeff, U.S. Senator from the State of Alabama......    14
Smith, Hon. Robert, U.S. Senator from the State of New Hampshire.    27

                               WITNESSES

Broadway, John, National Federation of Independent Business......    37
    Prepared statement...........................................    91
Cahill, John, commissioner, New York State Department of 
  Environmental Conservation.....................................    46
    Prepared statement...........................................   110
    Report, Plan to Phase Out the Fresh Kills Landfill...........   114
Ciofalo, Anthony, chairman, Environmental Industry Associations..    51
    Letter, response to request for additional information.......   268
    Prepared statement...........................................   257
Coats, Hon. Dan, U.S. Senator from the State of Indiana..........     7
    Letter, Indiana Department of Environmental Management.......    61
    Prepared statement...........................................    59
Franks, Hon. Bob, U.S. Representative from the State of New 
  Jersey.........................................................    17
    Prepared statement...........................................    66
Grams, Hon. Rod, U.S. Senator from the State of Minnesota........    27
Johnson, Randy, chair, Board of County Commissioners, Hennepin, 
  County, MN.....................................................    32
    Prepared statement...........................................    77
    Responses to additional questions from:
        Senator Chafee...........................................    85
        Senator Lieberman........................................    87
        Senator Boxer............................................    87
        Senator Lautenberg.......................................    88
Leff, David K., assistant commissioner, Connecticut Department of 
  Environmental Protection.......................................    35
    Prepared statement...........................................    93
    Responses to additional questions from Senator Chafee........    95
Levin, Hon. Carl, U.S. Senator from the State of Michigan........    14
    Prepared statement...........................................    64
Mastro, Randy M., deputy mayor for Operations, City of New York..    47
    Prepared statement...........................................   250
Norquist, Grover G., president, Americans for Tax Reform.........    36
    Prepared statement...........................................    89
Olson, David L., Dakota Resource Council, on behalf of Western 
  Organization of Resource Councils..............................    49
    Letter, response to request for additional information.......   256
    Prepared statement...........................................   255
Pascrell, Hon. Bill Jr., U.S. Representative from the State of 
  New Jersey.....................................................    15
    Prepared statement...........................................    65
Rooney, John E., mayor, Northvale, NJ............................    30
    Letters in response to testimony, from several New Jersey 
      officials..................................................   370
    Prepared statement...........................................    67
    Report to Congress on Flow Control and Municipal Solid Waste.    70
    Response to additional questions from:
        Senator Chafee...........................................    76
        Senator Lautenberg.......................................    76
Seif, James M., Secretary of Environmental Protection, 
  Pennsylvania Department of Environmental Protection............    45
    Prepared statement and several exhibits......................    98
    Responses to additional questions from Senator Chafee........   109
Specter, Hon. Arlen, U.S. Senator from the Commonwealth of 
  Pennsylvania...................................................     9
    Prepared statement...........................................    63

                          ADDITIONAL MATERIAL

Articles:
    Businesses Face Town Trash Fee, Smithtown News, March 6, 1997   401
    Flow Control Uncertainty Upsets Investment Ratings, Waste 
      Age, January 1997..........................................   399
    Standard & Poor's Lowers New Jersey Counties' Solid Waste 
      Debt.......................................................   306
    Waste Flow Drying Up, Smithtown News, February 27, 1997......   400
Letters:
    American Public Works Association............................   423
    Baltimore, Maryland, Department of Public Works..............   431
    Borough of Wildwood Crest, New Jersey........................
      373, 375...................................................
    Borough of Woodbine, New Jersey..............................   372
    Bristol, Connecticut, Resource Recovery Facility.............   433
    Chester County, Pennsylvania, Board of Commissioners.........   435
    Dodge County, Minnesota, Board of Commissioners..............   438
    Dutchess County, New York, Executive.........................   439
    Emmet County, Michigan, Department of Public Works...........   441
    Environmental Industry Association...........................   443
    Fairfax County, Virginia, Board of Supervisors...............   426
    Federation of New York Solid Waste Associations..............   446
    Fulton County, New York, Department of Solid Waste...........   448
    Housatonic Resources Recovery Authority, Brookford, CT.......   450
    Huntsville, Alabama, Solid Waste Disposal Authority..........   452
    Islip, New York, Resource Recovery Agency....................   397
    Jefferson Smurfit Group, St. Louis, Missouri.................   403
    Kent County, Michigan, Board of Public Works.................   456
    King County, Washington, Council.............................   458
    Marion County, Oregon, Board of Commissioners................   460
    Mecklenberg County, North Carolina, Board of Commissioners...   463
    Middle Township, Cape May, New Jersey........................   370
    Minnesota Office of Environmental Assistance.................   465
    Montgomery County, Pennsylvania, Waste System Authority......   467
    Morris County, New Jersey, Municipal Utilities Authority.....   468
    National Solid Wastes Management Association.................   268
    Newburgh, New York, Comptroller..............................   469
    Olmsted County, Minnesota, Board of Supervisors..............   477
    Oneida-Herkimer Solid Waste Authority, Utica, New York.......   478
    Onondaga County, New York, Resource Recovery Agency..........   480
    Sibley County, Minnesota, Board of Supervisors...............   475
    Tri-County Solid Waste Office, Nicollete County, Minnesota...   473
    Portsmouth, Virginia, Mayor..................................   481
    Prince William County, Virginia, Board of Supervisors........   483
    Sherbourne County, Minnesota, Zoning Administration..........   484
    Sea Isle City, New Jersey....................................   371
    Sussex County, New Jersey, Municipal Utilities Authority.....   487
    Union County, New Jersey, Utilities Authority................   488
    Wight County, Virginia, Board of Supervisors.................   454
    York County, Pennsylvania, Solid Waste and Refuse Authority..   490
Reports:
    A Plan to Phase Out the Fresh Kills Landfill, City of New 
      York.......................................................   114
    Cost of Flow Control, New Hampshire Department of 
      Environmental Services.....................................   409
    Moody's Municipal Credit Report..............................   319
    Report to Congress on Flow Control and Municipal Solid Waste, 
      Environmental Protection Agency............................    70
Statements:
    American Forest and Paper Association and the Paper Recycling 
      Coalition..................................................   351
    Associated Builders and Contractors..........................   353
    American Public Works Association............................
      424, 432...................................................
    Board of Chosen Freeholders, Warren, New Jersey..............   355
    Cape May County Municipal Utilities Authority, Comprehensive 
      Solid Waste Management Program Overview....................   366
    Chester County, Pennsylvania, Board of Commissioners.........   436
    Conrad, Hon. Kent, U.S. Senator from the State of North 
      Dakota.....................................................   271
    Gorton, Hon. Slade, U.S. Senator from the State of Washington   272
    Government Finance Officers Association......................   376
    Integrated Waste Services Association........................   396
    Hayes, Anthony W., director of Public Works, Falmouth, ME....   445
    Jefferson Smurfit Corporation................................   404
    Local Government Coalition for Environmentally Sound 
      Municipal Solid Waste Management...........................   404
    Luther, Hon. Bill, U.S. Representative from the State of 
      Minnesota..................................................   282
    Marinakis, George, executive director, Cape May County 
      Municipal Utilities Authority..............................   362
    Minge, Hon. Dave, U.S. Representative from the State of 
      Minnesota..................................................   283
    Moody's Investor Service.....................................   307
    Murray, Hon. Patty, U.S. Senator from the State of Washington   275
    National Coalition for Flow Control..........................   418
    PSA, The Bonds Market Trade Association......................   420
    Robb, Hon. Charles, U.S. Senator from the Commonwealth of 
      Virginia...................................................   276
    Solid Waste Association of North America.....................   428
    Southeast Public Service Authority of Virginia...............   485
    Standard and Poor's Rating Service...........................   285
    Wellstone, Hon. Paul, U.S. Senator from Minnesota............   277



             TRANSPORTATION AND FLOW CONTROL OF SOLID WASTE

                              ----------                              


                        TUESDAY, MARCH 18, 1997

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 a.m., in 
room 406, Senate Dirksen Building, Hon. John H. Chafee 
(chairman of the committee) presiding.
    Present: Senators Chafee, Smith, Allard, Sessions, Baucus, 
Lautenberg, Reid, and Lieberman.

OPENING STATEMENT OF HON. JOHN H. CHAFEE, U.S. SENATOR FROM THE 
                     STATE OF RHODE ISLAND

    Senator Chafee. Good morning. I want to welcome our 
distinguished panelists here today.
    I just want to say, we've worked on this in past years. I 
thought the legislation we came out with last year was good. I 
know there's some suggestion that there be what we call a 
negative presumption--no imports can take place unless the 
local community says so.
    That presents some difficulties to me. But we're going to 
listen to the witnesses, and we'll get started.
    [The prepared statement of Senator Chafee follows:]
  Statement of Hon. John Chafee, U.S. Senator from the State of Rhode 
                                 Island
    We are here this morning to once again focus on two important 
public policy issues related to the management of municipal solid 
waste. Both issues touch on one of the most important powers that our 
Constitution delegates to the Congress--the power to regulate commerce 
among the States. I welcome all of our witnesses today, and especially 
Senators Coats, Levin and Specter; and two House Members from New 
Jersey, Representatives Franks and Pascrell.
    The two public policy issues before us today are flow control of 
municipal solid waste (``MSW'') and regulation of interstate 
transportation of MSW. Flow control legislation would allow a political 
entity to require disposal of MSW at a designated MSW management 
facility. This creates a revenue stream to pay off the bonds which 
financed the facility. The goal of interstate waste legislation is to 
regulate the flow of MSW between exporting States and importing States.
    Flow control and interstate waste are the two different sides of 
the same coin--restrictions on the free flow of MSW. The Supreme Court 
has consistently held, in a line of cases stretching back to the famous 
Philadelphia v. New Jersey case in 1978, that MSW is an article of 
commerce. This means that any State or local law that regulates the 
movement of MSW must be evaluated in light of Commerce Clause 
jurisprudence.
    Before hearing from the other members of the committee and our 
witnesses, I would like to make a few points. I will start with 
interstate waste. Senator Coats has made the issue of controlling the 
interstate movement of MSW one of his highest priorities since he first 
entered the Senate 8 years ago. I sympathize with the plight of the 
importing States. I know that the concerns of importing States are 
heightened due to the planned closure of New York City's Fresh Kills 
landfill in 2001. This facility currently accepts 13,000 tons per day 
of trash, or about 4 million tons per year.
    Once again in this Congress, as in the last Congress, I have made 
the passage of interstate waste legislation one of my highest 
priorities. I once again will work with Senator Coats and other 
Senators from both importing States and exporting States to try to 
reach an accommodation between the respective needs of both groups.
    Though I have not introduced a bill on this issue, I believe that 
last year's bill remains a very viable compromise on interstate waste. 
That bill, S. 534, passed out of this committee unanimously in 1995 and 
passed the Senate in May 1995, on a vote of 94-6. Language identical to 
S. 534 again passed the Senate by unanimous consent in July 1996 as an 
amendment to the fiscal year 1997 Energy and Water Appropriations bill. 
As we all know, that provision was dropped in the conference on that 
bill.
    As we start anew on resolving the interstate waste issue, I would 
strongly caution anyone who seeks to ``better the deal'' from what we 
passed twice in the last Congress on interstate waste. I will oppose 
legislation that tilts the scales too heavily in favor of the importing 
States at the expense of exporting States, like my own State of Rhode 
Island.
    One of the most problematic provisions to ``strengthen'' the bill, 
from the importing States' perspective, is the so-called ``presumptive 
ban.'' This would create a statutory presumption against the lawful 
shipment of MSW across State lines. Let me be clear on this issue: a 
presumptive ban is unacceptable and goes too far to restrict the free 
movement of commerce among the States.
    The Commerce Clause of the Constitution came about because of the 
need to check local jealousies in matters of protecting home markets. I 
believe that when we legislate to restrict free movement of commerce in 
a national market, we should tread very lightly. The creation of a 
``presumption'' against commerce is probably the most severe restraint 
on free movement we could impose short of an outright ban. This means 
the ``default'' position is closed borders and no movement.
    I believe this is precisely backwards--any ``default'' position 
should allow free movement unless the importing State acts. A 
presumptive ban is far more than is needed by importing States to 
address the problems they now face due to unpredictable waste imports. 
More importantly, it is far too great a limitation to place on free 
movement of commerce. I agree the States should have the right to say 
``no'' to imports but a presumptive ban goes too far.
    The resolution of the flow control problem also directly implicates 
the commerce power. Federal legislation granting States or local 
governments the power to impose flow control would grant State or local 
governments the power to create local waste monopolies. Flow control 
proponents argue that the Supreme Court decision in the 1994 Carbone 
case places at risk their facilities, solid waste management programs, 
and credit.
    In the Carbone opinion, Justice Kennedy, writing for the majority, 
reminds us that ``The central rationale for the rule against 
discrimination is to prohibit State or municipal laws whose object is 
local economic protectionism, laws that would excite those jealousies 
and retaliatory measures the Constitution was designed to prevent.'' 
Justice O'Connor, in her concurring opinion, reminds us that the 
Constitution leaves it within Congress' power to impose legislation 
that alters the preference for free movement of articles in commerce.
    In the last Congress, our bill, S. 534, contained a title on flow 
control. The original philosophy on flow control was twofold. First, we 
sought to protect State and local officials who, prior to Carbone, 
assumed their flow control laws were constitutional and issued bonds 
based on that erroneous assumption. Second, we imposed a sunset 
provision that eliminated flow control when the bonds were paid off or 
at the end of a facilities useful life, but in any case not longer than 
30 years after passage.
    We deviated from this fairly clear-cut starting point as members 
sought to protect facilities or systems in their States that fell 
outside the definitions. From our starting point, we layered on 
protection for additional facilities or systems in markup, between 
markup and floor consideration, and finally during floor consideration. 
There were still Senators with unsatisfied needs at final passage who 
would have sought further expansion in conference. At the end of that 
process, the original narrow intent of S. 534 was all but lost to well-
intentioned efforts to protect local economic interests.
    Two more years have passed since we approved S. 534's flow control 
provisions. We are now 3 years removed from the Carbone decision. I 
believe it is time to reexamine the issue of flow control in light of 
the experience of the last 3 years to determine if the legislation is 
still needed and what the proper scope of any legislation should be.
    The flow control panel today will reveal that there are two 
compelling and competing local interests at stake, in addition to the 
national interest on regulating interstate commerce. State and local 
flow control laws were widely used until Carbone as a tool to guarantee 
that projected amounts of waste and revenues would be received at a 
waste management facility. The revenue is used to pay off the bonds 
that financed construction of the facility. Revenues are also used for 
other related purposes like funding recycling programs or household 
hazardous waste collection programs. In some cases, the bonds were 
issued on an assumption that flow control was constitutional, even 
though that assumption turned out to be wrong.
    The competing local interest is that waste disposal is cheaper 
under a competitive system than it is under a government-created 
monopoly. Reimposition of flow control, in the view of these parties, 
amounts to a hidden tax on those that are forced to dispose at a 
facility charging above-market rates.
    Since the Carbone decision, CRS reports that 18 MSW bond issues 
have been downgraded. Fifteen of these downgrades occurred in the first 
12 months after the Carbone decision, and relatively few have occurred 
in the 2 years since we last took testimony on this subject. Testimony 
received from Standard & Poor's, which rates approximately 40 percent 
of the MSW bond issues, states that:

        The downgrades that have occurred are a result of increased 
        competitive pressure which has led to an overall decline in 
        credit quality. These ratings are not solely based on the 
        absence of Federal flow control. However, in all four cases [of 
        ratings downgrades], the high fixed costs associated with 
        waste-to-energy facilities have limited financial flexibility 
        and resulted in high tipping fees which are above those of 
        alternative disposal facilities.

    If we are going to take the dramatic step of granting Federal 
permission for the creation of local trash monopolies that burden 
interstate commerce, I want to be sure that we are fixing an acute 
current problem. I also want to be sure that the cure is not worse than 
the problem we seek to solve.
    Justice Kennedy wrote in Carbone: ``The Commerce Clause presumes a 
national market free from local legislation that discriminates in favor 
of local interests.'' I agree. I said 2 years ago in my opening 
statement that ``I will tread cautiously with respect to interfering in 
the waste market.'' This is still my view.

    Senator Chafee. Senator Lautenberg, do you have a 
statement?

  OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, U.S. SENATOR 
                  FROM THE STATE OF NEW JERSEY

    Senator Lautenberg. Yes, Mr. Chairman.
    This is a subject that's had great interest in the State of 
New Jersey. Mr. Chairman, I in the last Congress, once the 
Supreme Court declared in the Carbone decision that flow 
control laws were unconstitutional, this committee passed, and 
the Senate approved, an amended bill to grandfather State flow 
control systems and to allow Governors to restrict the 
transportation of trash into their States.
    However, despite efforts by a unified New Jersey 
delegation, the House failed to act. In the face of this 
gridlock, States and communities across our country have tried 
to adjust to the new post-Carbone reality. As more time has 
passed, and governments have modified their policies, the 
issues facing the Congress have evolved significantly and are 
now very different than those that existed in the last 
Congress.
    In the past, I even led filibuster in the Senate to allow 
New Jersey and other States to transport municipal solid waste 
across State lines, at least until we could achieve self-
sufficiency. At the same time, after the Carbone decision, I 
insisted that should Congress grant States the right to 
restrict interstate transport of waste, it should also 
grandfather existing flow control systems that New Jersey and 
other States established to provide for adequate intra-State 
disposal.
    Now, given what's happened in the real world in the past 2 
years, these debates seem somewhat stale. In the absence of any 
definitive Congressional action, communities in many States 
that have flow control are now taking advantage of a more 
competitive, free market system.
    In New Jersey, the situation has been a little more 
complicated. A Federal court in the State declared the State's 
flow control system unconstitutional pursuant to Carbone, but 
stayed its decision for 2 years, in anticipation of 
congressional action.
    Yet despite the stay keeping flow control in effect, there 
has been considerable leakage, as we say, out of the State. 
Many incinerators and landfills have lowered their tipping fees 
and prices have gone down for consumers. Mr. Chairman, 
communities in New Jersey are trying to adjust to the Carbone 
decision. The genie, however, is out of the bottle. The 
possibility of reinstating flow control in 1997 may have a very 
different impact than the question we faced in 1994 and early 
1995.
    In many places, the reinstatement of flow control would 
mean that waste disposal costs would increase for consumers. A 
free marketplace is bringing benefits to local communities. At 
the same time, the situation is putting many disposal 
facilities dependent on flow control into financial difficulty 
and we can't ignore that fact, either.
    Meanwhile, Governors and Senators continue to argue the 
case for interstate restrictions on waste transport. The cross 
currents in this debate will be reflected in the testimony of 
our witnesses today. I understand our colleagues, Senator Levin 
and Senator Coats, remain committed to restrictions on 
interstate waste transport, although these restrictions seem in 
my view to have no solid economic or environmental rationale.
    Two of my colleagues from New Jersey, who are here now, 
Congressman Pascrell and Congressman Franks, reflect the 
dilemmas in our State. Mr. Pascrell, a Democrat, and former 
mayor, supports the free market, because he has seen the 
benefits it's brought to his city. Mr. Franks, Republican, 
supports a regulated intra-state market, because his district 
has facilities built under the flow control regime.
    I recognize the validity of both of their concerns, and 
we'll listen to the debate with interest while reserving 
judgment. The public policy decision we make or fail to make 
will have significant long-term ramifications.
    I look forward to today's testimony to help clarify the 
situation. I thank you, Mr. Chairman.
    Senator Chafee. Thank you. As I mentioned before Senator 
Baucus and Senator Reid arrived, I am anxious to move along. 
We've got quite a few witnesses here. I'd like to, if anybody 
has an opening statement, we certainly look forward to have it 
put in the record. Senator Reid, do you have any comments?

  OPENING STATEMENT OF HON. HARRY REID, U.S. SENATOR FROM THE 
                        STATE OF NEVADA

    Senator Reid. I'll follow the admonition of the chair. I am 
here for a number of reasons. One, I'm a member of the 
committee. And Mr. Chairman, also, I have followed the travails 
of Senator Coats over the years. And I wanted to have a first 
row seat to watch his performance here today.
    [Laughter.]
    Senator Chafee. Well, he's had a lot of experience at it.
    Senator Baucus.

  OPENING STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR FROM THE 
                        STATE OF MONTANA

    Senator Baucus. I have a statement, Mr. Chairman. And I do 
so, Mr. Chairman, because this is such an important matter, and 
one that I've been involved with for many years, in fact, three 
or four Congresses. And I just think it's time, frankly, we get 
this matter behind us so that we can show Congress actually can 
do something.
    Senator Chafee. Well, as you know, we passed it here. It's 
the House that didn't pass it.
    Senator Baucus. That remains another subject, Mr. Chairman, 
which I will not, in deference to you, get into at this moment.
    But it is time we finally get this passed through both 
Houses of Congress and the conference report adopted by both 
Houses.
    Mr. Chairman, it's a very simple issue. Boiled down to its 
essence, the question is, should a State, should a local 
community--I'm speaking now of the interstate transport of 
garbage, not flow control--have the right to say ``no'' to 
garbage being transported from some other State into that 
State. That's the central question.
    I believe the answer to that question should be yes, that 
it is irresponsible for a community, a State, to ship that 
State's garbage out of State. It's just a variation of the 
``not in my backyard'' syndrome. It's that simple. We want to 
encourage communities to recycle, take care of their own 
garbage. We also want to allow communities to say ``no'' to the 
transportation of garbage into their own State. It's just a 
very simple matter.
    I know there are some equities back and forth, because some 
companies want to transport garbage, and we have different 
population densities in different parts of the country.
    But the bill that I introduced on this subject yesterday 
goes a long way toward resolving that balance. I hope, Mr. 
Chairman, we can finally get this issue behind us after all 
these years. It will also deal with flow control, which is a 
little bit more contentious, and a little bit more difficult to 
deal with.
    But with respect to the garbage issue, I just very much 
hope that finally, both Houses can pass a bill, and the 
conference report is adopted by both Houses.
    [The prepared statement of Senator Baucus follows:]
  Statement of Hon. Max Baucus, U.S. Senator from the State of Montana
    Mr. Chairman. Thank you for holding this hearing on the question of 
interstate garbage shipments.
    I regard this as a very simple question. Should a State, or a town, 
have the right to decide whether it wants to host a big garbage dump 
for waste from other States? Or should States and towns have nothing to 
say about it?
    To me the answer is simple. People should have the right to say 
``no.'' And we need to give them that right.
    Many States are looking to put their garbage somewhere else. In New 
York, for instance, the closing of the Fresh Kills landfill means that 
some 5 million tons of garbage each year needs a new home. The State 
can take only a fraction of that waste. So the rest, about 4 million 
tons a year, has to go out-of-state. To Pennsylvania, New Jersey, Ohio 
or beyond.
    Now I want to single out New York. Many other great cities have 
similar troubles. For example, a few years ago Miles City, Montana 
faced the prospect of becoming a dumping ground for Minneapolis trash. 
The 5,000 citizens of Miles City had no say at all in whether a ``mega-
landfill'' would go up right in their back yards to take care of 
garbage from a city nearly eight hundred miles away.
    Trash disposal is tough. But simply dumping one city's garbage 
problems on unsuspecting, perhaps unwilling towns hundreds of miles 
away is wrong. It is unfair. Every town in America should have the 
right to say ``No.''
    But as my colleagues know, they don't have that right. State laws 
restricting out-of-state garbage have consistently been overturned in 
court as a violation of the Commerce Clause of the Constitution. So we 
need a national law to preserve this basic part of self-determination--
the right to decide whether or not a community wants to accept out-of-
state garbage.
    I've introduced a bill which I think achieves that objective. But 
it also strikes a balance. It will work for every community, in every 
State. It is very similar to the bill the Senate and House nearly 
passed about 3 years ago.
    I hope that following this hearing, the committee will have a 
business meeting to consider my bill. We need to get moving on this 
issue.
    Mr. Chairman, that is why I thank you for holding this hearing. And 
let's get to work.

    Senator Chafee. Thank you, Senator Baucus.
    Senator Boxer's statement will be placed in the record.
    [The prepared statement of Senator Boxer follows:]
    Statement of Hon. Barbara Boxer, U.S. Senator from the State of 
                               California
    Mr. Chairman, thank you for calling this hearing today to revive 
this important discussion concerning disposal of our nations' waste.
    As you know, Congress has come very close in the last few years to 
passing interstate waste and flow control legislation. I am hopeful 
that with your leadership, we will be able to act quickly to finally 
resolve these issues which have caused much unnecessary litigation and 
economic hardship throughout the nation.
    In my State of California, counties are required to meet aggressive 
recycling and waste reduction goals--there was a 25% reduction by the 
beginning of the 1995 and there must be a 50% reduction by the turn of 
the century. To meet these ambitious goals, California counties must 
aggressively manage their municipal solid waste.
    However, California communities do not use flow control authority 
to do this. Instead, they rely on contracts with private waste 
companies to ensure that their garbage goes to a designated recycling 
plant or other waste facility. They also believe that the Supreme 
Court's decision in Carbone v. Clarkstown does not restrict such 
contracts.
    Many California counties have contacted me to voice their concern 
about potential impacts Federal legislation may have on their ability 
to meet the State's solid waste goals. They fear that the bill will 
unintentionally restrict their ability to employ contractual agreements 
to direct waste to particular waste facilities.
    As you may recall, I was unable to support final passage of 
legislation introduced last session. The legislation did not adequately 
address the needs of many California cities and counties which have 
incurred debt in order to achieve California's ambitious integrated 
waste management requirements.
    I intend to follow this issue closely and will work to preserve the 
ability of California's counties to meet their waste management 
responsibilities.
    Thank you again, Mr. Chairman and Senator Baucus, for the hard work 
that you have put into resolving these complex waste questions. I 
welcome our witnesses today, and look forward to hearing their 
testimony.

    Senator Chafee. Now we have a distinguished group before 
us, and I would ask Senator Coats if he would please proceed.

  STATEMENT OF HON. DAN COATS, U.S. SENATOR FROM THE STATE OF 
                            INDIANA

    Senator Coats. Mr. Chairman, thank you very much. I very 
much appreciate the opportunity to testify this morning.
    This is not an issue new to anybody on this panel, and 
certainly not new to those of us down here at the witness 
panel. Many, many States are affected by this matter. It's an 
important issue to my State, as members of the panel know, it's 
something I addressed attention to very early in my Senate 
career. We've had some interesting battles over the years to 
try to finalize this legislation.
    The irony is that we have worked through a number of 
difficult issues and come to a bipartisan, in fact overwhelming 
consensus here in the Senate, in terms of how we ought to 
proceed. There's been give and take on both sides. That's part 
of the legislative process. Nobody got exactly what they 
wanted. But we were able to forge compromises, and I think, 
workable legislation in the past, and I see no reason why we 
can't do that again.
    I agree with Senator Baucus in saying that enough is 
enough, let's get this thing done and prove that we can 
actually address an issue that's important to an awful lot of 
people and an awful lot of State authorities across the 
country.
    Now, there's fresh impetus, I guess, and I'll use a pun, 
fresh impetus for us to move because of the announcement by the 
city of New York that they're going to be closing the Fresh 
Kills landfill. That has immense implications for all 
individuals outside of New York, particularly those States and 
areas most close to it. The State of New York has had an 87 
percent decline in landfills since 1986. So their capacity to 
receive an extraordinary amount of volume, it's going to be 
about 13,000 tons of solid waste per day, when they close Fresh 
Kills, the capacity of these out of New York City receiving 
sites to absorb this kind of volume just doesn't exist. We're 
talking figures approaching 5 million tons of garbage on an 
annual basis.
    My State, like others, continues to be impacted adversely 
by out-of-state trash. We've been a net importer of waste for 
over 6 years. Last year we received the largest amount of out-
of-state trash, over 1.8 million tons, of any year of those 
six. But until the Congress acts and passes legislation, as we 
all know, there's nothing that we can do about it in terms of 
placing reasonable restraints and restrictions on how that 
trash comes into our State.
    Last year, as I said, we passed, we enacted legislation in 
the Senate. We came close, but close doesn't count. We're now 
moving into a new Congress with a new major threat facing us 
with the closing of Fresh Kills landfill. Appropriately named, 
I guess, Fresh Kills. The problem is, by the time the waste 
gets to Indiana, it's not fresh. And it creates a problem for 
us.
    We had 94 Senators support the legislation that this 
committee drafted last year. I want to thank the Chairman and 
thank the ranking member and thank the members of the panel for 
working expeditiously last year to forge a compromise piece of 
legislation that earned the support of 96 Senators. I also want 
to thank the Chairman for his expeditious scheduling of this 
issue in this Congress, and his willingness to move forward to, 
once again, put in place legislation that can address the 
problem.
    I've reintroduced legislation. I've made some modest 
modifications in response to inquiries we've had from Governors 
and from importing States in terms of things they think they 
need in this legislation. I'm more than happy to work with the 
committee in trying to forge a consensus on how we should move 
forward.
    My colleagues, Senator Specter and Senator Levin, really 
represent a great number of Senators from importing States that 
want to work with us in this regard.
    Finally, with respect to flow control, let me just state 
that has not been a major concern of mine. I wanted to address 
the solid waste issue just on the matter of solid waste. I 
understand that flow control is an issue that is related to 
this, and we forged a compromise on that last year. Hopefully, 
we can address the concerns that Senator Lautenberg and that 
other States raised relative to flow control and the changes, 
some of them court ordered changes, that have taken place in 
the last 2 years.
    Let me finally state that as I conclude my remarks, I am 
not arguing for an outright ban on all waste shipments between 
States. There are examples of effective and efficient cross 
border waste management.
    However, we must give States a role in making waste 
management decisions. Because without congressional authority, 
we will be unable to even sit at the table to state our case 
for determining our own environmental destiny relative to our 
ability to dispose of trash. There are many States and many 
communities that can and want to make arrangements with out-of-
state haulers. I think that's appropriate.
    I also think it's appropriate, however, that a State have 
the ability to put some reasonable regulations on there so that 
it can ensure that its own waste disposal needs are not 
overwhelmed by unwanted imports from out of State.
    Again, I commend the committee for taking expeditious 
action on this, and I look forward to working with you in the 
days ahead, hopefully not years ahead, but days ahead, as we 
move forward on this legislation.
    Thank you, Mr. Chairman.
    Senator Chafee. Thank you, Senator Coats. I just want to 
briefly say, yes, we want to move forward on this, as I told 
you when you and I have had conversations. From what you said, 
you support what we did last year, indeed, you voted for it. 
But obviously, you could have voted for it, and still had some 
reservations. But that S. 534, you still support.
    Senator Coats. Well, I do. I would like to work with the 
committee, I think it provides the foundation for how we 
proceed this year. We work, obviously no one was 100 percent 
satisfied with that legislation, because it tried to bring 
together two competing needs.
    I have in the meantime, as I stated, heard from a number of 
Governors and States relative to issues that they would like us 
to address. I don't think they are issues that can't be worked 
on. I would like to present those to the committee. I could 
detail those for you if you want, but I'm happy to work with 
your staff and give that information to you.
    There are some modest changes that I think are important to 
importing States that we can incorporate in this bill without 
jeopardizing the support from the importing States. I know they 
have some concerns on flow control changes, and I think we can 
just put them all in play and work on a new bill that brings 
these minor modifications, but essentially preserves what we 
did last Congress.
    Senator Chafee. Thank you. What I'd like to do, if you can 
stay, Senator, for a few minutes, what's your situation?
    Senator Coats. Well, we have a closed Intelligence hearing 
relative to the Lake situation at 10 o'clock that all of us, 
it's sort of a command performance that we've been asked to 
attend.
    Senator Chafee. That may be moot.
    Senator Coats. Well, I thought it was moot, and I was just 
given a note that it's----
    Senator Chafee. Does anybody have a question of Senator 
Coats?
    [No response.]
    Senator Chafee. All right, thank you, Senator.
    Senator Specter.

    STATEMENT OF HON. ARLEN SPECTER, U.S. SENATOR FROM THE 
                  COMMONWEALTH OF PENNSYLVANIA

    Senator Specter. Thank you very much, Mr. Chairman. I 
appreciate an opportunity to appear here this morning to set 
forth my views and I know my full statement will be made a part 
of the record, I will summarize it.
    I think that when Senator Coats says the garbage doesn't 
smell very good by the time it gets to Indiana, he vastly 
understates the issue. It doesn't smell very good ever. It's a 
long way from New Jersey to Indiana, but it goes through 
Pennsylvania and New York, and then he stops, as Senator Coats 
points out. But I recollect more than a decade ago, the garbage 
trucks piled up outside of the highways in Scranton when my 
late colleague Senator Heinz and I first started to move on 
this issue.
    I'm very hopeful that we will get this legislation passed 
early in the Senate, try to get our colleagues in the House to 
move ahead on it as well. We came within a hair's breadth of 
having it done in 1994. I remember the day very well, without 
getting into too many of the particulars, we were practically 
in agreement in the Senate cloakroom. I went to catch the 
train, confident that the arrangement had been worked out, and 
got a recall message and came back to the Senate cloakroom. It 
did not work out.
    It is a matter which requires our attention. Because the 
Supreme Court of the United States has said that on 
constitutional grounds, the States may not control interstate 
commerce. So it's up to the Congress. We have the authority to 
do it. And we really should act on that.
    The situation in Pennsylvania is a very serious one. 
Wherever I travel, I hear objections on it. In 1993, we had 
some 3.9 million tons of out-of-state municipal and solid 
waste. It rose to 4.3 in 1994 and 5.2 in 1995, and a record 6.3 
in 1996.
    Senator Reid. Six point three what?
    Senator Specter. Six point three million tons.
    Senator Reid. Did you get any?
    Senator Coats. There's still some left over for Indiana, 
even after the 6.3 million tons.
    Senator Specter. Pennsylvania is a large State, Senator 
Reid.
    The issue of flow control is a difficult one. We have 
competing interests there. My sense is that we worked it out 
about as well as we can, although there may be some issues 
which need to be revisited. The bill that we passed in the 
104th Congress has a compromise set of ingredients that allowed 
a Governor to unilaterally freeze out-of-state waste in 1993 
levels at landfills and incinerators that receive waste in 
1993. It included an important State ratchet providing that a 
Governor could----
    Senator Chafee. Senator, you're discussing last year's 
bill?
    Senator Specter. Right. Just the highlights of it, 
including an important State ratchet providing that a Governor 
could restrict waste imported for any one State in excess of 
1.4 million tons in 1996, down to 550,000 tons in 2002 and 
thereafter, providing a concrete incentive for the large 
exporting States to get a handle on their solid waste 
management immediately.
    I thank the chair and the committee for scheduling an early 
hearing, and am hopeful we can move ahead. Right now, we do 
have floor time in the Senate where we could take it up and 
perhaps at some leisure. We don't have the leisure later on, 
when we have tight time agreements, but have the kind of debate 
if we need it to move ahead and pass the legislation.
    I thank the chair and the members for listening.
    Senator Lautenberg. Before we--I recognize Senator Coats 
has time constraints.
    Senator Coats. Well, Senator Baucus just gave me a note 
saying it was canceled. I just had a note 5 minutes before 
saying it was on.
    Senator Baucus. I just checked about 2 minutes ago.
    Senator Coats. I think your information is more current 
than mine, so I have a little time here.
    Senator Chafee. So you can stay, Senator.
    Senator Specter. Mr. Chairman, I'm going to have to ask to 
be excused.
    Senator Chafee. Let me just ask you one question before you 
go, Senator Specter. First, Pennsylvania is the largest single 
importing State in the country, which you're aware of. You've 
got a lot of stake in this, obviously.
    Second, from your comments, I gather that you are, yes, 
you'd like changes if they could be made, but I take it you 
would find S. 534, which we did last year, acceptable?
    Senator Specter. I would, Mr. Chairman. I think there can 
always be improvements. And like Senator Coats, I am contacted 
by very many people who have a lot of changes. But I think the 
time has come to act if we're to really address this issue.
    Senator Chafee. Yes, we recognize every change you do roils 
up somebody on the other side.
    Senator Specter. And it passed by big numbers, and it 
accommodated most of the interests of most of the States.
    Senator Chafee. I thought so, likewise. The Senator has to 
go. Does anybody have a question?
    Senator Lautenberg. I would just like to note, if I might, 
Mr. Chairman, about the dilemma that we face here, as we look 
at the possibilities of legislation. Pennsylvania, for 
instance, ships out 800,000 tons, and many of our States have 
the same exact parameter, where some comes in and some goes 
out. Of course, the number of import, of tons imported to 
Pennsylvania are substantially larger. But this is a problem 
that doesn't get easily solved.
    I would ask either one of you, if your Governor had the 
right to tell the owner of a licensed landfill that he could no 
longer accept out-of-state garbage, might that look like 
takings under the view of many here, when property is condemned 
to eliminate economic opportunity in association with that 
property, if it meets all the tests, zoning, etc.?
    Senator Coats. Well, I'll start with that, and then let my 
colleagues address it also. If we want to have a situation in 
this country where no State has the right to address matters 
that degrade its environment, and just simply absolutely leave 
it to the free market, then we might as well cancel the Clean 
Air Act. We might as well cancel all environmental rules on the 
books that give any kind of State authority and power to make 
reasonable restraints against the free market system in the 
interest of improving their environment.
    We see this as a major environmental issue in the State of 
Indiana. Our State legislature passed and the Governor signed 
legislation that put us on one of the most progressive courses 
of dealing with our environmental laws in Indiana of any State 
in the Union. We have an aggressive set of legislation and laws 
that require recycling, that require waste reduction. We've 
taken responsibility for our own environmental future.
    Yet all of that effort is overwhelmed if we have no say 
whatsoever in the amount of material that in effect overwhelms 
our ability to control our own environmental destiny. As I said 
in my statement, we're not stating that we are placing an 
outright ban on out-of-state waste. That's where I started the 
legislation, and I think I've come a long way since then.
    We are allowing States and communities to enter into arm's-
length transactions in terms of arrangements to receive waste 
for economic benefit. But we're simply saying that, the State 
has to have some ability to say, to put reasonable restrictions 
on that when it overwhelms the local area, or the State's 
effort to control, to even have the capacity for its own waste.
    Senator Specter. If I may respond briefly, I note Senator 
Lautenberg's comment about Pennsylvania shipping out a little 
over 800,000 tons, which is a very small amount compared to the 
more than 6 million which came in last year. We have this long, 
unguarded border between Pennsylvania and New Jersey. I hope we 
can retain it, passage over the Ben Franklin Bridge, for 
example.
    On the issue of a taking, I do not think we run into a 
constitutional problem of taking property without due process 
of law under the fifth amendment. There are many regulations 
which are much more stringent than this which could confront 
taking property. I think this is a reasonable regulation. The 
Congress does have the authority to restrict interstate 
commerce, in a sense, every time you impose a restriction there 
might be considered to be some taking of somebody's rights or 
somebody's property.
    But I think that the kind of legislation we passed in the 
104th Congress would pass Constitutional muster easily.
    Senator Lautenberg. Well, I would for just a minute more 
like to pursue something that Senator Coats and I have kind of 
argued this question in the past. I once threatened to send out 
notices to all of our colleges and our high schools where the 
players, possible football players, and many of them were 
really great, were recruited for Notre Dame and otherwise, and 
I said, don't go there, because they're only going to insult 
you. But I think we're past that stage now, of the portrayal of 
the fat guy from New Jersey with a cigar, saying, we're going 
to dump on----
    Senator Specter. Oh, don't abandon that threat, Senator 
Lautenberg----
    [Laughter.]
    Senator Lautenberg. I'm going to give you a little----
    Senator Coats. That commercial won awards.
    Senator Chafee. Let's move on with this.
    Senator Specter. If you want to reopen that issue, I'm 
happy to do so. Because it makes great----
    Senator Chafee. No, I don't think we want to reopen 
anything like that.
    Senator Specter [continuing]. Theater, but it doesn't make 
good legislation.
    Senator Lautenberg. Mr. Chairman, if I might make this 
point. We are the beneficiary, let me reverse that, the 
recipient, of tons of contamination from Indiana and other 
States west. When you say, when you raise the question, and 
it's a legitimate question to be raised, but the answer is a 
little bit, I think, more obscure than a yes or no. Does a 
State have a right to block contamination that comes from 
another place to its shores, or to its boundaries.
    I say, OK, let's start with Indiana and New Jersey, and 
erect the kind of facilities that doesn't have that stuff going 
up in the air and falling down all over our place, no matter 
what we do to protect ourselves.
    The point I make, and I think this is a critical one, in 
your statement about if no State has the right to protect 
itself, we get to the fundamental question about whether or not 
we are a federation, we are a Nation of States, each of whom 
has some obligation to the other. If we can't work on that 
basis, heaven forbid. Because I can see New Jersey saying to 
the trucks that pour across our State from Pennsylvania 
carrying coal and saying, stay out of here, get rid of your 
coal some other way. Or other States sending cargo out through 
our ports, or again, Indiana contributing very substantial 
amounts of contamination through smoke-stacks that dump 
pollution on our State.
    So you have a problem, Senator Coats. It's not one that can 
be easily resolved by saying, OK, let's just cut it off in one 
part and accept the others.
    By the way, as a reminder, I'm sure you're aware of this, I 
looked at the source of the waste that comes to your State: 79 
percent from Illinois, 12 percent from Kentucky, 7 percent from 
Ohio, 2 percent from Michigan. There's hardly any that comes 
from our area to your State.
    So we don't have a direct argument on this, but we do have 
a very important disagreement.
    Senator Coats. Well, Senator, when this issue started, we 
had a very direct argument, because most of our waste was 
coming from New Jersey. I'm proud of the fact that by raising 
my voice and providing legislation in the Senate, which we were 
able to stop, we were able to convince New Jersey that Indiana 
shouldn't be the repository of your solid waste. You found 
other States to dump it in, and we're pleased that you're not 
coming to Indiana with that waste.
    As far as the contamination from electric coal-fired 
generating plants, you and I both voted for the Clean Air Act, 
which placed extraordinary financial burden on the industries 
of Indiana and the taxpayers of Indiana. But both Senator Lugar 
and I supported that effort, against considerable public 
opposition within our State. Because we knew rates were going 
to go up.
    All in an effort, based on somewhat sketchy scientific 
information and since confirmed that perhaps that wasn't the 
problem with acid rain. Nevertheless, we thought it was an 
appropriate thing to do to help preserve the environment in a 
way that you and I both want to preserve it. It was at 
considerable cost to our State, and I would put up the amount 
of money that our State, our taxpayers have spent to clean up 
the environment against what New Jersey has done with its solid 
waste, and match you easily on that one.
    So I think we've done our share. But frankly, Mr. Chairman, 
just in conclusion here, we don't solve this problem by 
dredging up old issues. If we're going to get back into a tit-
for-tat, as we were 6 or 8 years ago, when we were promised 
that all New Jersey needed was a few years to clean up its act 
and then there wouldn't be a problem, I can engage in that kind 
of back and forth. I think the constructive thing to do here is 
what I've suggested in my opening statement, and that's put 
past issues and disputes behind us and move forward with 
consensus legislation, like we did in the last Congress.
    Senator Chafee. That's what I'd like to do. I'd like to 
concentrate on the legislation that's before us, the S. 534 
from last year. And what suggestions we have, as that bill 
passed last year overwhelmingly.
    Now, we've been joined by two colleagues. As I mentioned 
before, we've had the two representatives from New Jersey here. 
We always say when you're waiting, you know when the pilot says 
thank you for your patience, that you've sat on the runway for 
2 hours. I haven't had any patience at all. But I get thanked 
for it. So I want to thank you both for your patience here.
    Senator Smith, do you have any comments?
    Senator Smith. Have the witnesses spoken?
    Senator Chafee. No, they have not.
    Senator Smith. Well, I have a statement that I'd like to 
make, but I'll be happy to defer to hearing the witnesses, and 
then I'll make it.
    Senator Chafee. All right.
    Senator Sessions.
    Senator Sessions. Mr. Chairman, I have a statement for the 
record. I'm interested in listening to the panel.
    Senator Chafee. All right, fine.
    [The prepared statement of Senator Sessions follows.]
Statement of Hon. Jeff Sessions, U.S. Senator from the State of Alabama
    I would like to thank the chairman of this committee, Senator 
Chafee for holding this hearing today to consider the issues of 
interstate waste and flow control.
    I support the free market system and the efficiency, lower costs 
and other benefits competition brings to the marketplace. The movement 
of trash should not be an exception so long as the methods of disposal 
comply with the latest regulations regarding protection of the 
environment.
    It appears to me that prior arrangements for limited flow control 
by communities who have invested their funds to build state-of-the-art 
waste to energy plants and environmentally sound landfills could be 
legitimate exceptions to this rule. Flow control authority was believed 
to be legal prior to the Supreme court case of Carbone v. Town of 
Clarkstown made on May 16, 1994, which held certain flow control 
authority to be unconstitutional. The real problem is that the decision 
threatens the ability of communities to repay bonds issued to fund 
their solid waste projects.
    If the flow of trash needed to raise revenues to support the bond 
debt of a facility drops, then the community becomes responsible for 
paying the difference. This is a serious question and it requires 
careful thought. I look forward to hearing from the witnesses today as 
we discuss what can be done to deal with this situation.
    The Huntsville Alabama Waste Authority has over $120 million in 
outstanding debt because of the investment made in its state-of-the-art 
waste to energy facility. Bonds were issued for the financing of this 
facility before the Carbone decision was rendered by the Supreme Court 
and the plan relied on flow control authority by Huntsville to provide 
revenues to finance the facility.
    The city of Huntsville believed flow control authority to be legal 
at the time when they agreed to enter into a contract with the Waste 
Authority to provide the new facility with a steady stream of trash to 
support itself. Without the ability to continue compliance with the 
contract to haul trash to this facility, the project will probably fail 
and the income necessary to retire the bonds will not exist. In any 
event, it will be the people of Huntsville who will pay if we do not 
enact limited flow control authority ``grandfathering'' protection to 
help those communities who relied on it to finance their solid waste 
projects.
    I look forward to hearing from the witnesses today as we look for a 
reasonable approach to solving this problem, fostering competition 
while at the same time protecting those communities who made sound 
decisions to control their waste and took on debt based on their most 
current interpretation of the law.

    Senator Chafee. Now, Senator Levin.

 STATEMENT OF HON. CARL LEVIN, U.S. SENATOR FROM THE STATE OF 
                            MICHIGAN

    Senator Levin. Thank you, Mr. Chairman.
    Just very briefly, I want to come and give my very strong 
support to legislation to give State and local governments 
authority to regulate flow of solid waste into and out of their 
jurisdictions. I remember when I was in local government, for 8 
years, how excruciatingly difficult it was to make siting 
decisions and to make determinations as to where we would 
dispose of waste, how we would dispose of waste, and so forth.
    It seems to me, once we have a planning process and a 
decisionmaking process like that, made by local government, 
with all the difficulty and complexity involved therein, that 
we should not ignore it and not override it totally, but 
indeed, allow States and local governments to have a say in 
determining the flow in and the flow out of waste. Otherwise, 
it is almost impossible to issue bonds for facilities relative 
to disposal of waste. It is really very difficult if not 
impossible to get local governments to make siting decisions 
for the disposal of waste.
    The other day, we had a site in my home State, which 
announced a decision to receive 500,000 tons of trash annually 
from Canada. Now, Canada is a pretty big place. And the idea 
that we would take a community that has made very difficult 
decisions in terms of waste disposal to suddenly have a private 
contract entered into with a company in Canada to bring a large 
amount, at least relative to that site and to that particular 
area, of waste from Canada into my home State, ignores any fair 
treatment of local government and State government in the 
control of their own environment.
    So I would hope that we would promptly take up a bill which 
would permit reasonable controls. Simple price competition is 
not going to drive good planning in this area of public 
activity. I think that it's so long overdue that we allow State 
and local governments back into this arena that I would hope 
this committee would actively participate in making that 
happen.
    Finally, in answer to Senator Lautenberg's question about 
takings, I think it's quite clear from the Supreme Court 
opinions that these activities would not be considered takings, 
or else the Supreme Court would not have suggested, either 
impliedly or explicitly that Congress could authorize State and 
local governments to have this kind of a role. I don't think 
they would either by implication or explicitly have reached 
that conclusion if there were a taking involved.
    So I would think those Supreme Court opinions, which give 
Congress the role which we're now exploring, do give us the 
green light. Before my red light goes on, I'll simply thank the 
committee for allowing us to testify and for hopefully giving 
some impetus to legislation that is long overdue, so that our 
State and local governments are not treated unfairly and in a 
high-handed way when it comes to the very, very important 
question of waste disposal.
    Thank you.
    Senator Chafee. Senator, you voted for final passage of S. 
534 in 1995. Should we come up with a bill similar to that, 
would you be supportive of it?
    Senator Levin. I would. I'd like to see some changes in it, 
as I think many of us would, that would be improvements from 
our perspective. But the answer is yes, it would be an 
improvement over the present situation.
    Senator Chafee. All right. Do you have any questions of 
Senator Levin, Senator Lautenberg?
    Senator Lautenberg. No.
    Senator Chafee. All right, thank you very much, Senator.
    Senator Levin. Thank you all.
    Senator Chafee. Now we have two very distinguished members 
from the House here. Mr. Pascrell, why don't you proceed. We're 
glad you're here.

STATEMENT OF HON. BILL PASCRELL, JR., U.S. REPRESENTATIVE FROM 
                    THE STATE OF NEW JERSEY

    Mr. Pascrell. Thank you, Mr. Chairman. Good morning to you, 
and members of the committee, and to our senior Senator from 
New Jersey. I'm glad to be here with Congressman Franks. We've 
worked on, although we're from different sides of the aisle on 
many issues when we were in the State legislature in New 
Jersey, we've agreed, we've disagreed, but we've always been 
civil.
    I want to thank you for giving me this opportunity. I look 
at this issue, Mr. Chairman, from two particular perspectives. 
No. 1, this is beyond any doubt to me a consumer issue. And No. 
2, while we debate in State legislatures and in the Congress of 
the United States, State or Federal mandates, I believe that 
this is an unfunded mandate which exists in the United States 
of America. It is not funded.
    I believe that flow control is a consumer issue. In this 
instance, the consumer is best served by a system of open 
competition which results in lower garbage disposal costs.
    Before I discuss why I'm opposed to flow control, I believe 
it is important for me to briefly comment on some background on 
how I came to adamantly oppose flow control. Prior to being 
elected to the Congress, I was an Assemblyman in New Jersey for 
9 years. I served as Mayor of the third largest city for 7 
years, Paterson, NJ. It was during my tenure as Mayor where I 
gained first-hand experience in paying for flow control.
    In 1995, the city of Paterson spent $11 million of its $137 
million budget on waste disposal. This is roughly 13 percent of 
the municipal side of the budget. Then we had to send the waste 
to an incinerator in neighboring Essex County.
    These precious dollars that funded this overpriced disposal 
might have otherwise supported additional fire protection, 
police, education. The city of Paterson in a lawsuit asserted 
that if it were allowed to pay market costs for disposal it 
would have saved approximately between $169,000 and $233,000 
per month. Due to waste flow control in our State, passed by 
our State, we have the highest disposal costs in the Nation. 
This is unacceptable.
    Prompted by these experiences and the U.S. Supreme Court's 
decision, which held that flow control laws violate that 
constitution we live under, I, along with my former colleague, 
whom you will hear from later, Assemblyman and Mayor John 
Rooney, became the founding members in 1995 of the Mayor's Task 
Force Against Flow Control. Two hundred and forty mayors out of 
the 530 some in the State of New Jersey joined us.
    We all agree that flow control costs our cities tens of 
millions of dollars each year, that flow control stifles the 
operation of the free market, and that at the end of the day, 
there is no reason that New Jerseyans should not enjoy the 
benefits of the free market and the operation of their solid 
waste system.
    I'm interested over the past few years of those who have 
pontificated about open markets and free competition, except 
when it comes to certain issues. These issues impact upon local 
government. I believe that Tip O'Neill was correct: ``all 
politics is local.''
    The simple goal of the task force was to ensure that 
municipalities have the right to send trash to the cheapest 
waste facility available. Mr. Chairman, the imposition of solid 
waste flow control is a flawed policy that benefits neither the 
consumer, the taxpayer, nor the general economy. The only 
beneficiaries are local government officials and county utility 
authorities. Flow control is not necessary to enable 
governments to obtain bonds needed to build waste facilities. 
With flow control assurances, underwriters are willing to issue 
bonds for facilities that could prove wasteful and incapable of 
competing in an open marketplace. I would hope that's what we 
all want.
    If underwriters do not want to support construction of a 
facility, that's a good thing. It protects taxpayers and 
consumers from subsidizing what would be a poor investment 
decision by the local government in the first place. Groups 
like the New Jersey Environmental Federation and the Sierra 
Club are also opposed to flow control, adding yet another voice 
to the already long list of those in opposition.
    The fact of the matter is that flow control legislation is 
simply bad policy. I'm strongly opposed to it. Local 
governments, small businesses and households are better off 
without it. We should let the free market determine the lowest 
price to the benefit of all involved. To borrow a quote from a 
former colleague, who's Mayor of the city of Jersey City, Brad 
Schundler, instead of passing flow control legislation, 
Congress should bury it in the trash heap of discarded ideas.
    Mr. Chairman, this issue is a critical one, not only for 
New Jersey but the entire Nation. No one is suggesting, those 
of us who oppose flow control legislation, no one is suggesting 
that a helter-skelter, cavalier system dominate. What we're 
saying is, the structure that exists now in America is 
unacceptable to the consumer and unacceptable to the municipal 
tax rolls throughout the United States.
    In conclusion, let me add this. In New Jersey, waste flow 
laws force us to use disposal facilities designated by the 
State and the county agencies even though these facilities 
charge tipping fees far in excess of what we pay or would pay 
in the free market. We can't justify this. Every year our 
taxpayers are forced by the system that exists in the State of 
New Jersey to forego other necessary services in order to pay 
for the millions of dollars in solid waste disposal costs that 
we need to incur.
    Mr. Chairman, we want to work together to fashion 
legislation that will provide for a free and open market which 
will have some structure, so that we do not impugn the 
integrity of any State. What I've noticed since coming here, 
Mr. Chairman, is instead of the partisan politics, we've often 
fallen into the sectional politics in the first 3 months since 
I've been here. I don't think it's healthy. I don't think it's 
wise. I don't think it proves anything.
    I want to work with you to come up with a solution to this 
problem. Thank you very much.
    Senator Chafee. Thank you very much, Representative 
Pascrell. Yes, indeed, we all want to work and see if we can 
solve this problem.
    Representative Franks, why don't you proceed.

  STATEMENT OF HON. BOB FRANKS, U.S. REPRESENTATIVE FROM THE 
                      STATE OF NEW JERSEY

    Mr. Franks. Mr. Chairman and members of the committee, 
thank you for giving me this opportunity to testify in support 
of Federal action required to avert a crisis in my home State 
of New Jersey.
    At issue today is a court ruling that if left unanswered 
could jeopardize the solvency of more than $1.7 billion in 
bonds issued by New Jersey counties to construct waste disposal 
facilities. Without congressional intervention, the burden of 
repaying this debt will fall on innocent taxpayers. Through no 
fault of their own, taxpayers could see huge increases in their 
local property tax bills.
    Mr. Chairman, I am not here to argue the pros and cons of 
flow control. Rather, my objective is to ensure that the 
taxpayers of New Jersey are not penalized because the Federal 
courts have invalidated a longstanding State policy. Let me 
briefly describe how New Jersey finds itself in this untenable 
position.
    Two decades ago, the State faced a solid waste crisis. With 
most of the State's landfills having reached capacity or forced 
to close due to the tighter environmental regulations imposed 
by RCRA, New Jersey was forced to rely heavily on out-of-state 
disposal. At one point, New Jersey was shipping nearly 55 
percent of its trash to other States, and the costs of disposal 
were skyrocketing.
    In response, our State legislature passed the 1978 Solid 
Waste Management Act, which required each of our 21 counties to 
develop a plan to dispose of their trash within the State. 
Counties issued over $1.7 billion in bonds to finance the 
construction of incinerators, transfer stations and landfills 
to comply with the State mandate.
    In my district alone, the County of Union issued more than 
$300 million in bonds to finance the construction of a waste-
to-energy incinerator. The financial scheme under which this 
and dozens of other facilities were constructed was based on 
the State's ability to direct all the trash generated in a 
specific geographic area to a particular disposal facility. The 
authority to direct the disposal of trash was essential to 
ensure that county utility authorities would have a guaranteed, 
steady flow of trash required to pay for the construction of 
disposal facilities.
    Therefore, ever since the late 1970's, flow control 
authority has been an integral component of New Jersey's solid 
waste management system. The 1994 Carbone decision and the 
subsequent Atlantic Coast decision have thrown New Jersey's 
solid waste disposal program into turmoil. The Carbone decision 
declared the practice of flow control to be unconstitutional. 
The Atlantic Coast decision upheld the Carbone ruling and gave 
our State 2 years after the last appeal to end its practice of 
directing waste flow.
    I recognize that allowing the free market to dictate solid 
waste decisions is ultimately in the best interests of 
consumers and taxpayers. However, New Jersey needs time to 
responsibly make the transition in a manner that will allow us 
to meet our $1.7 billion financial obligation.
    In light of the recent court decisions, the ability of New 
Jersey's counties to reimburse bondholders for the construction 
of waste facilities, as well as the ability to honor contracts 
with incinerator operators, are in serious jeopardy.
    Mr. Chairman, long before the Carbone decision, the State 
of New Jersey had made an enormous investment in its 
comprehensive solid waste management system. Taxpayers should 
not be stuck with the tab because the rules have been changed 
in the middle of the game.
    Governor Whitman, the New Jersey Assembly and all 21 of New 
Jersey's counties are asking for an extension of flow control 
authority until the debt obligations by the counties to 
construct disposal facilities have been paid off. I want the 
committee to know that there is strong support for 
grandfathering flow control authority for those States that had 
it in place prior to the Carbone decision. In the 104th 
Congress, the entire bipartisan New Jersey congressional 
delegation supported H. Res. 349, and other efforts to give a 
temporary reprieve from the effects of the Federal court 
decision.
    In addition, the State of New Jersey, New York, 
Pennsylvania, Ohio, Indiana and Michigan have all agreed on 
flow control legislation. I urge the committee to pass 
legislation to grant flow control authority to States like New 
Jersey so they can repay outstanding debts owed to investors, 
and then move on to an open competitive system.
    I thank you, Mr. Chairman, for this opportunity to testify. 
I appreciate greatly your leadership over the years on this 
issue.
    Senator Chafee. Now, Representative Pascrell, what do you 
say to that?
    Mr. Pascrell. What I say to it is, there's legislation 
pending in New Jersey right now that responds to the debt that 
my good friend Congressman Franks talks about. In fact, part of 
that debt that he talks about, the $1.7 billion, has allowed 
certain counties to bond for facilities that were never built.
    The wrong people in this business many times are in jail, 
Mr. Chairman. Imagine bonding for a capital facility that was 
never built. Now, that debt is important. It's not going to go 
away. It's not the debt of the State of New Jersey. It's the 
debt of the counties and the authorities that have existed 
under the law in the State of New Jersey.
    Senator Chafee. Now, wait, you lost me there. I'm not sure 
what you mean, they bonded to build a facility, an incinerator, 
let's say. And you say they never built it?
    Mr. Pascrell. That's correct, sir.
    Senator Chafee. But if they never built it, then they don't 
have the debt.
    Mr. Pascrell. They do have it, sir.
    Senator Chafee. Then what they----
    Mr. Pascrell. They floated the bonds, sir.
    Senator Chafee. What did they do with the money?
    [Laughter.]
    Mr. Pascrell. We'd have to have another hearing for that, 
Mr. Chairman.
    [Laughter.]
    Mr. Pascrell. We'd be in the wrong committee.
    [Laughter.]
    Senator Chafee. Well, New Jersey is--well, I'd better watch 
my tongue.
    [Laughter.]
    Senator Chafee. What about that, Representative Franks?
    Mr. Franks. Senator, I can only speak to the resource 
recovery facility, the waste to energy facility that has been 
built, that is operating, is accepting trash, is operating at 
full capacity, is operating under the tightest environmental 
standards in the world, and it's productively dealing with a 
problem that used to be of enormous difficulty for our State.
    Senator Chafee. What Representative Franks is saying is 
this grandfather proposal, which we have considered in other 
years, and you know, your Governor, all 21 of your counties, 
are in support of this.
    Mr. Pascrell. Well, I'm here to testify how I perceive it, 
Mr. Chairman. You'll hear other people testifying from the 
State of New Jersey as well. I have for the record stated that 
240 cities have signed up in support of what we feel is 
necessary.
    Senator Chafee. You mean nationally?
    Mr. Pascrell. No, just in the State of New Jersey, Mr. 
Chairman.
    Senator Chafee. Two hundred and forty cities?
    Mr. Pascrell. That is correct. That is correct. You're 
going to hear that again when Assemblyman Rooney speaks before 
you in a little while. The question of the debt is a critical 
one, Mr. Chairman. It's not going to go away. It's something 
that we understand as a State, even though this is incurred by 
the counties, that we have to address.
    Over a 10-year period, this would mean perhaps $10 per ton 
for the garbage in the State of New Jersey. It is not an 
unreasonable fee, considering how much the dollars would come 
down the cost of reducing or providing for solid waste 
reduction in New Jersey would save every municipality in the 
State of New Jersey. That is not unreasonable.
    We all understand that, Mr. Chairman. That's not the issue 
here. The issue is do we need a free market, and we believe we 
do.
    Senator Chafee. All right, Senator Baucus.
    Senator Baucus. Just briefly following up on that line of 
questions.
    Mr. Pascrell, are you against any grandfathering?
    Mr. Pascrell. No, I'm not.
    Senator Baucus. What about the facility that was built and 
is operating that Representative Franks referred to?
    Mr. Pascrell. I believe part of that debt is questionable. 
But I believe that possibly we could use some grandfathering, 
if that's the question that you're asking me.
    Senator Baucus. It is.
    Mr. Pascrell. But I think there is some obligation on the 
part of the State of New Jersey, due to the fact that this is a 
system that was imposed by the State on the counties in New 
Jersey.
    Senator Baucus. What I'm looking for is some compromise 
here.
    Mr. Pascrell. Yes. It's obvious that we want to compromise. 
I think it's in everybody's better interest.
    Senator Baucus. So that's one area where perhaps you could 
compromise?
    Mr. Pascrell. Yes, sir.
    Senator Baucus. Any other?
    Mr. Pascrell. No, sir.
    [Laughter.]
    Senator Baucus. Mr. Franks, Representative Franks, do you 
have any suggestions where you might compromise, where there 
might be some more common ground?
    Mr. Franks. Senator, I just want to point out, back in 
1988, the Third Circuit Court of Appeals of the Federal 
Judiciary looked at our system of flow control. They found it 
to be constitutional. Only when the Carbone decision arrived 
did they turn that third circuit decision on its head.
    The rules have been changed. We invested in a system under 
one set of rules. We moved from sending 55 percent of our trash 
out of State to now sending 14 percent out of our State.
    Senator Baucus. Would you agree to some kind of grandfather 
provision?
    Mr. Franks. Yes, I think that's a prudent way to go. As we 
transition to a free and open competitive market, I agree with 
my friend Mr. Pascrell, that ought to be this committee's 
objective, in my judgment.
    But how we pivot and reach that point, I think it has to be 
done very carefully.
    Senator Baucus. Let me be more clear here. So in the 
future, you believe that there should not be, flow control 
should not be allowed, States and municipalities cannot enact 
flow control provisions?
    Mr. Franks. I simply believe that the indebtedness incurred 
prior to the Carbone decisions should be allowed to be paid 
off. There should be an open, free, competitive market. It 
would be to the benefit of all----
    Senator Baucus. You're pretty close, then.
    Mr. Pascrell. On some issues we are, Senator. And on some 
issues, we're not. I think the issue of a competitive market is 
important.
    We're talking about a town, not only in New Jersey, where 
property taxes are running faster than inflation, we need to 
address that. The only way we can do that is go into our own 
municipal budgets, whether small towns or large towns, and see 
how much part of that municipal budget goes through solid waste 
recovery. I mean, we put a moratorium on facilities in New 
Jersey. That was passed in 1991, I believe.
    Senator Baucus. My time has expired. Thank you.
    Senator Chafee. Senator Lautenberg.
    Senator Lautenberg. Good to see two friends here in 
somewhat questionable agreement. I understand where each of you 
is coming from, therefore I will walk the line that I think is 
wise and judicious.
    Senator Baucus. As you always do.
    [Laughter.]
    Senator Lautenberg. That is, Representative Franks, what 
would happen to disposal costs if in fact we did have a flow 
control measure put into law?
    Mr. Franks. If we grandfathered the current flow control 
mechanism under which the State is currently operating, sir?
    Senator Lautenberg. Well, you can talk about that. But what 
I see are neighboring communities, one paying a rate that's 
substantially less than the other one. How does that get 
justified? Frankly, I think that the States were treated 
unfairly by the presumption that flow control was something 
that was going to exist, and go ahead out and do your share in 
getting wherever you can in getting rid of the trash that you 
have in a sensible, environmentally sound way.
    But that's past history. Frankly, I think it's something 
maybe the Federal Government has to take some look at. The 
building was done, the bonds were floated, under conditions 
that were thought to be permanent.
    Nevertheless, I think it is realistic to say that rates 
would raise substantially for the disposal of garbage if we 
have a flow control condition put into the hopper, even if it 
grandfathers one community or one county or another. Because 
the neighboring county, the neighboring community, would have 
one heck of a problem understanding why they're paying so much 
to send it to the incinerator, and another community is paying 
so little to send it to another disposal site.
    Mr. Franks. Senator, what raised questions in my own mind 
was, as Senator Specter and Senator Coats were testifying, if 
an after, in the post-flow-control era, if other States were 
inviting our trash to their landfills, at what point would the 
local residents of Indiana and Pennsylvania say, enough is 
enough, we're not taking any more of New Jersey's garbage. It 
was 20 years ago that that resentment from our out-of-state 
shipments caused us to try to identify more in-State disposal 
capacity.
    We now deal with the vast bulk of garbage generated in our 
State within our State borders. That has been one relative 
success of flow control authority. Has it been too expensive 
and inefficient? Yes, it has, in retrospect. We should move to 
an open and competitive market. But I don't want it to be left 
as though there has been no progress by the State of New Jersey 
in terms of dealing with our in-State disposal needs.
    Senator Lautenberg. Just to close, Mr. Chairman, what goes 
around comes around. Pennsylvania was dumping millions of tons 
of their trash in New Jersey. We went to court, to the Supreme 
Court, to try to stop Philadelphia from shipping its garbage to 
our State. The Supreme Court said, too bad. It's interstate 
commerce. You can't interfere with it. And one day, you're 
absolutely right, one day we'll be looking for ways to get rid 
of garbage because there will be fewer licenses, there will be 
more obstructions to the free shipment of material.
    Thank you very much, Mr. Chairman.
    Senator Chafee. Thank you, Senator.
    Senator Reid. Not here. Senator Smith.
    Senator Smith. Thank you, Mr. Chairman.
    Gentlemen, let me just focus a little bit on the issue of 
the bonds. I remember 2 years ago, we had this same debate that 
municipalities were going to have to default on the bonds it 
issued. It's my understanding we've had about 18 downgrades out 
of some 130, 140 such bonds around the country. The sky didn't 
fall.
    I guess, how do you justify, then, wanting to promote a 
grandfather, and I think you were very clear on that, 
Representative Pascrell, but let me ask you, Representative 
Franks, what is the justification for it? Bond holders take 
risks, don't they? We haven't seen a mass downgrading. We've 
seen 18, I don't know if they're all 18 in New Jersey or not. 
But so what would be the justification for moving in that 
direction?
    Mr. Franks. Senator, I'm holding the Wheat First Butcher 
Singer fixed-income research report on the facility that's in 
my county. Let me just read to you their outlook: Uncertain. 
The system is not sustainable in its current form without flow 
control. Until an alternative solution is found, a below 
investment grade level rating is appropriate.
    I'd be happy to leave this for the committee. But as people 
are looking at how we've built our system in the last 20 years, 
to suddenly remove flow control authority and no longer allow 
counties to direct waste generated within their boundaries to a 
particular location, it simply will not allow these facilities 
to function on an ongoing basis.
    Senator Smith. Well, a year and a half or so ago, we had 
witnesses, I asked every witness, or almost every witness what 
the bondholders were told, did the bondholders know that flow 
control may not be a valid authority for the locality when they 
bought their bonds? Do you know that, in New Jersey? What were 
the bondholders told, the investors?
    Mr. Franks. All I know is that until the Carbone decision 
in 1994, all preceding Federal and State cases had held the 
flow control authority of New Jersey to be constitutional. So 
it was against that backdrop that bondholders would have made 
their purchases.
    Senator Smith. So was there anything in those bonds, was 
there anything, was there any language in those bonds that 
said, absolutely that this was the way it was going to be, that 
it was constitutional?
    Mr. Franks. Senator, I'm unaware of how any such guarantee 
could be delivered, given the changing composition of the 
courts and their changing philosophy.
    Senator Smith. But isn't that the point?
    Mr. Franks. I don't know how any authority could have 
looked forward and predicted with precision how courts would 
have dealt with very difficult constitutional issues like this.
    Senator Smith. I mean, that's the point isn't it? 
Bondholders take risks.
    Mr. Franks. Well, Senator, I guess they do take risks, but 
what level of risk are they expected to take? The vagaries of 
the marketplace certainly are inherent whenever you make this 
decision. But----
    Senator Smith. I know. But, last point, Mr. Chairman. The, 
I mean, when we had this debate a year and a half ago, or when 
we had, Senator Chafee and I and others put together this bill, 
this compromise bill, and we did grandfather flow control, and 
some wanted to go beyond, I think we had 15 or 20 years, some 
wanted to go beyond that, and we saw, we didn't, I could not 
seem to get an answer on whether or not these communities 
thoroughly analyzed the legality of the authority on, in 
issuing these bonds. If in fact since that time, we have not 
had massive defaults, and the bonds are sustainable, then I 
don't see the issue of this great, immediate action being 
necessary. A year and a half ago, there seemed to be that 
sense. But we didn't pass a bill. Maybe that was a good thing.
    Mr. Franks. Senator, there's just one element I want you to 
look at. That is, that flow control authority still exists 
today on the ground in New Jersey. There's been no default, 
because the flow control authority continues to operate. It 
will operate until a 2-year period after the last appeal is 
heard. The reason why there's been no default is because we've 
been able to take the garbage generated in a particular county 
and direct it to a particular facility.
    Senator Chafee. When's that 2 years up?
    Mr. Franks. We've not defaulted because the revenue stream 
has been unbroken thus far.
    Senator Chafee. When's the 2 years up?
    Mr. Franks. Well, when will the last appeal be heard.
    Senator Chafee. Oh, I see, you haven't finished the appeal.
    Mr. Franks. No, sir. So the integrity of the system 
temporarily is intact.
    Senator Smith. They've also cut their overhead, institute 
competitive tipping fees. It's the free market. It's the free 
market that's savings the bonds, I think, not the flow control.
    Senator Chafee. Thank you, Senator.
    Senator Sessions.
    Senator Sessions. I just have a couple of questions. With 
regard to, Congressman Pascrell, on Paterson, you're opposing 
the grandfathering, correct me if I'm wrong, fundamentally 
because you think it's costing your city and the citizens of it 
too much to send your waste to an incinerator that could be 
better landfilled in some other location at less cost.
    Mr. Pascrell. I oppose flow control for the basic reasons 
that I stated earlier, Senator. And I believe that it leads to 
consumer increase in prices and higher taxes. And I think I've 
proven that by the numbers.
    Senator Sessions. In effect, as it plays out in your city, 
you're required to send your garbage to a facility that costs 
you more than you think it ought to cost?
    Mr. Pascrell. Well, we go one better than that, Senator. 
Because of the flow control in the State of New Jersey, my 
city, which has what we call a transfer station within it, as 
part of the State system and county system, cannot use the 
transfer station. It has to send its garbage by the hauler, 
whom we hired through competitive bidding, to an incinerator in 
another county. That incinerator charges my city more money 
than it costs people from New York State to bring their garbage 
into New Jersey to that same incinerator.
    You know, when you look at the rhyme or reason to this, 
Senator, there are many issues here. And it is complex. I don't 
believe it is simple, as was stated before. These are complex 
issues, and we need to study them. We don't want to hurt 
anybody here. There needs to be parity.
    There has never been any suggestion by those of us who 
support the elimination of flow control that it's not a phantom 
debt. It's a real debt, that these counties owe to the 
bondholders. We understand that. The whole State should be held 
accountable for that. Whether facilities were built or not, 
even, we should be held accountable for it.
    Senator Sessions. Well, in Huntsville, AL, they built an 
incinerator, and bonds were floated for that. If they lose that 
source of garbage, I think, Senator Smith, wisdom 
notwithstanding, I think somebody, those bonds are going to be 
called. It's a troubling thing to me, the grandfathering seems 
to be, those who've really invested, who've developed a system, 
and it's a mistake, if it's a mistake, sometimes you enter into 
a contract, it's a mistake, you have to see it through to the 
end. Maybe that's where we are.
    Mr. Chairman, that's really all I have.
    Senator Chafee. Thank you, Senator.
    Senator Allard.
    Senator Allard. Thank you, Mr. Chairman. I have just a few 
questions.
    On the average, how long are these bonds extended out? How 
long is the payoff period, 30 years, 15?
    Mr. Franks. The forecast that I've seen, Senator, would 
indicate that the last of the bond indebtedness would be paid 
off by the year 2010, 13 years from now. On the last of the 
facilities. It's important to understand, the range of debt, 
the resource recovery facility in my county has some $275 
million still outstanding. The County of Hunterton, in the 
rural western part of the State, has bonded for $300,000. They 
would be able to pay that off in a relatively short period of 
time. Under our legislation, the open market would begin to 
operate in Hunterton County earlier than it would in the County 
of Union, which would need this additional year for them to pay 
off the indebtedness.
    Senator Allard. When would be the payoff date in your 
county, probably?
    Mr. Franks. I believe it's 2008, but I'm not certain.
    Senator Allard. Then you have 2 years beyond that in the 
law to move it into the free market system. Or no, that would 
be, that's when the last appeal is heard.
    Mr. Franks. That's correct.
    Senator Allard. Let me ask you when the last appeal, you 
anticipate this appeal process could be strung out for----
    Mr. Franks. I suspect one or both parties will ultimately 
take this to the Supreme Court. It would depend upon when the 
decision was rendered by the Court. I'm not that good a 
predictor of these things.
    Senator Allard. Can this process be strung out for 10 
years?
    Mr. Franks. No, I don't believe that there is a likelihood 
that the Court could take anywhere near that period of time.
    Senator Allard. Two years? Five years?
    Mr. Franks. I think the lower end of that scale might be 
possible.
    Senator Allard. Maybe 2 or 3 years. Then after that's done, 
maybe you have 2 years more after that last appeal?
    Mr. Franks. Correct.
    Senator Allard. So we're already halfway through and most 
of these projects are paying off those bonds. Just trying to 
deal with averages and how we might impact some.
    So it's a relatively short span. There's only about 5 years 
where you're going to have those bonds downgraded, or are they 
downgraded now? I guess they're downgraded now.
    Mr. Franks. They have been downgraded now.
    Senator Allard. They have been downgraded now.
    Mr. Franks. Yes.
    Senator Allard. What I'm getting at, you're going to have 
maybe just 5 years on the bond life there where it's going to 
be a real problem for you, isn't it? If we had legislation, if 
we created just a short window and put some time restraints on 
that, maybe that would get you into the free market system. But 
I don't want to, wouldn't want to see this abused. Maybe that 
is somewhere we can work on a compromise. I think that's a good 
observation.
    Are there surpluses that develop in some of these 
authorities? Are there surpluses that develop there where we 
could say, well, if there's a surplus developing, maybe we can 
require a paydown of the bond early, even take more of these 
projects out of the system if we set a date?
    Mr. Pascrell. Senator, there are no surpluses. Some of 
these authorities have become cash cows. If you say it the way 
it is, you have asked an honest question, I'm trying to give 
you an honest answer.
    Senator Allard. They overcharge for the fee, and if the 
city collects this fee, then the fees can be directed for other 
purposes in support of the services?
    Mr. Pascrell. That's correct.
    Senator Allard. OK. Thank you, Mr. Chairman.
    Senator Chafee. Thank you, Senator.
    I do want to point out that in the next two panels, we will 
have mayors and county commissioners and so forth who will be 
able to address these issues also.
    Senator Lieberman.
    Senator Lieberman. Mr. Chairman, I heard you and therefore 
have no questions.
    [Laughter.]
    Senator Chafee. Thank you very much.
    I want to thank the panel and thank you gentlemen very much 
for coming.
    We now have a new panel coming forward. Mayor Rooney, 
Commissioner Johnson, Mr. Leff from Connecticut, Mr. Grover 
Norquist, president, Americans for Tax Reform, and Mr. John 
Broadway of Virginia.
    Now, I do understand that Senator Grams was here and was 
going to introduce--come forward, Senator. I know you wanted to 
introduce Mr. Johnson to us, and we'd be delighted to hear your 
comments.
    Senator Allard. Mr. Chairman, I wonder if I might be 
recognized, and I ask unanimous consent that my opening 
statement be made a part of the record.
    Senator Chafee. Definitely.
    [The prepared statement of Senator Allard follows:]
Statement of Hon. Wayne Allard, U.S. Senator from the State of Colorado
    Thank you Mr. Chairman. First of all Mr. Chairman I want to 
congratulate you for chairing the subcommittee that has the opportunity 
to deal with Superfund and flow control and interstate waste. You cut a 
shrewd deal with the other subcommittee chairs over jurisdictions.
    More seriously though, flow control and interstate waste are 
important issues to many States and local governments. However, while I 
normally agree that we should respect decisions made at the local 
level, in this case I believe we should carefully examine the actions 
they have taken. By enacting flow control laws and interstate waste 
laws State and local government's are interfering with the free market. 
If their reasons aren't compelling we shouldn't ratify their actions.
    The issue of flow control is the most disturbing. In this instance 
localities can completely subvert the free market process, if they are 
allowed to pass flow control laws. While I understand that there are 
financial considerations to flow control, I have yet to be convinced 
they are compelling enough to pass laws restricting free trade.
    Thank you Mr. Chairman, I look forward to today's hearing.

    Senator Chafee. Senator Grams, why don't you sit right up 
there.
    We want to welcome you, and you go to it.

  STATEMENT OF HON. ROD GRAMS, U.S. SENATOR FROM THE STATE OF 
                           MINNESOTA

    Senator Grams. Thank you very much, Mr. Chairman.
    I don't have any questions or issues. I don't want to cause 
this hearing any problems.
    But I just wanted to be here, and it is my privilege to 
introduce a very important person at this hearing today. In the 
interest of time, I want to make this statement very short.
    Mr. Chairman and other members of the committee, I come 
before you today not just to commend the committee for focusing 
its attention on this very important issue, but also to 
introduce a friend and a colleague who has worked tirelessly on 
the flow control issue, but nationally and in our State of 
Minnesota.
    As chairman of the board of commissioners in Hennepin 
County, MN, and the future president of the National 
Association of Counties, Randy Johnson has devoted many years 
of his service to addressing this very important issue. Randy's 
additional service as chairman of the Environmental Task Force 
for the Urban Consortium helps make him a national authority on 
environmental public policy. Hennepin County, which includes 
the city of Minneapolis and its suburbs, has the responsibility 
to manage a comprehensive recycling and integrated solid waste 
management program. I am positive that Randy's service in 
Hennepin County will be of considerable benefit as this 
committee deliberates the issue of solid waste management.
    So once again, Mr. Chairman, I want to thank you very much 
for your efforts to address this very important issue. It is my 
privilege to introduce to this committee chairman of the board 
of county commissioners, Randy Johnson.
    Senator Chafee. Well, thank you very much, Senator, for 
taking the trouble to come here. We appreciate it.
    Senator Smith, did you have a comment you wish to make?

 OPENING STATEMENT OF HON. ROBERT SMITH, U.S. SENATOR FROM THE 
                     STATE OF HEW HAMPSHIRE

    Senator Smith. Yes, Mr. Chairman. I just wanted to make a 
couple of comments as part of an opening statement, to say that 
you and I worked very hard 2 years ago I think to accommodate a 
lot of interests on both interstate waste and flow control, 
trying to balance many different interests. Even though I had 
some strong reservations about the use of flow control, S. 534 
that we introduced did attempt to narrow, to provide a narrow 
grandfather of flow control authority to municipalities that 
relied on its power to fund waste energy and landfill disposal 
facilities.
    During the full markup we even broadened the grandfather 
authority to accommodate member concerns. We took the bill to 
the floor, accommodated other member concerns, and I think it 
passed by a vote of 94 to 6. Then the House of Representatives 
did not act on the bill, probably because they felt that the 
free market ought to take its course. As I look back on that, 
maybe the House was right.
    You know, we received information that the sky was falling, 
we had witnesses testify that if we didn't act immediately to 
protect municipalities we were going to have massive defaults 
on bonds, and then 2 years later, we find that the sky is not 
falling. I alluded to this in the questions a moment ago.
    But the truth of the matter is, as we can see, we have some 
written testimony from Standard & Poors, these bonds have 
remained stable. There are, although New Jersey does have still 
the flow control, there are areas of the country that no longer 
have flow control, and these facilities have not defaulted.
    So I think the supporters of flow control have a tougher 
case this year, at least with me. Last Congress, I did support 
grandfathering a limited number of flow control facilities. 
Because I was influenced, frankly, by the testimony of a number 
of these local governments and the issues regarding the bonds. 
But I was never convinced, nor was were my questions ever 
answered as to what these bondholders were told and what they 
weren't told. I didn't get an answer again this morning.
    Despite our good intentions, those who supported flow 
control were not satisfied with some of the common sense 
provisions, and even tried to further widen the limited 
grandfather than we had.
    So I think the issue, there are two issues here, Mr. 
Chairman, one is flow control and one is interstate waste. And 
I think having them together is perhaps taking on more than we 
can deal with. For more than 10 years, this committee has heard 
dozens of witnesses on interstate waste say that landfills were 
filling up faster than we could replace them, if we didn't act 
immediately we'd have a national garbage crisis on our hands. 
And in response to this, again, we did do some interstate waste 
reforms in S. 534.
    Now here we are back again 2 years later with additional 
data. We know more than we knew then. I've looked at some of 
that information from around the country, and it becomes pretty 
obvious that there may have been some overstatement, to put it 
mildly, regarding not only interstate waste but also flow 
control.
    Solid waste is still being transported in interstate 
commerce. Many States are importing as well as exporting. 
Landfill space is not the scarce commodity it was presented to 
be, and tipping fees are falling. The free market, to the 
consternation of many, is working, Mr. Chairman.
    So I look forward to hearing the testimony. I'm trying to 
keep an open mind. But it's becoming more and more difficult, 
because I think the evidence is not very convincing to me.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Smith follows:]
    Statement of Hon. Bob Smith, U.S. Senator from the State of New 
                               Hampshire
    Once again, we find ourselves here talking about interstate waste 
and flow control. Frankly, I am disappointed that we are here today.
    Two years ago, Senator Chafee and I worked very hard to put 
together an interstate waste and flow control bill that attempted to 
balance the many parties interested in these issues. Despite my strong 
reservations about the use of flow control, the legislation that 
Senator Chafee and I introduced, S. 534, attempted to provide a narrow 
grandfather of flow control authority to municipalities that had relied 
on this power to fund waste-to-energy and landfill disposal facilities. 
During the full committee markup, we broadened this grandfather 
authority to accommodate individual member concerns, and similarly did 
so on the Senate floor. Our bill contained interstate waste provisions 
that not only capped waste exports, but would have ratcheted these 
exports down over a series of years. We did not accept all the changes 
sought by members, but I believe that Senator Chafee and I bent over 
backward to be accommodating. Although the final bill passed the Senate 
by a vote of 94-6, the House of Representatives took a more free market 
approach to these issues, and S. 534 languished in the other body for 
the remainder of the Congress.
    To be honest, I believe that the legislation that passed the Senate 
had significant flaws, particularly in regards to flow control, and 
perhaps the House was right after all. However, at the time, I felt it 
was important to quickly address these issues, and it had been my hope 
that a Conference with our House counterparts would have resulted in a 
streamlined solution to these problems. Nevertheless, this did not 
happen. Today, one of my primary concerns is that the rationale for 
passing this type of legislation has not gotten any better, and in the 
case of flow control, it has gotten worse. I really question whether it 
makes any sense to spend any time on these issues here in the Senate, 
until we have better assurances that the House will be willing to move 
on these matters.
    I would like to make a few specific comments about the two issues 
we are here today to discuss. The first is the issue of flow control. 
This is an issue where some groups took a ``sky-is-falling'' approach. 
During the last Congress, we had witnesses who testified that we had to 
act ``immediately'' to protect municipalities from having to default on 
bonds they had issued to fund their waste-to-energy facilities, 
landfill construction and recycling efforts. Now we are here two years 
later, and, surprise, surprise, the sky has not fallen. While only 
about 18 downgrades have taken place nationwide--almost all in 1995--
widespread municipal defaults did not occur. As we can see from the 
written testimony of Standard and Poors, these bonds have remained 
stable because municipalities have reacted in a fiscally prudent 
manner: they have instituted competitive tipping fees, cut their 
overhead costs, and sought alternative streams of revenue. That is the 
way the free market should work, and that is the way it has worked. 
Yet, despite these facts, we will again have witnesses today who will 
claim that we have to act quickly to protect these bonds.
    Frankly, the supporters of flow control have a much tougher case to 
prove this year. Last Congress, I supported grandfathering a limited 
number of flow control facilities because I was influenced by the 
testimony of a number of local governments. Despite our good 
intentions, lobbyists who supported flow control were not satisfied 
with our common sense provisions, and worked hard to organize a number 
of harmful amendments to widen the limited grandfather that we had in 
S. 534. This effort not only created a number of significant flaws in 
our legislation, but I believe it also contributed to the ultimate 
demise of that bill. It is because of this experience, that I am wary 
of efforts to provide any grandfathering authority whatsoever.
    The second issue I want to talk about is the interstate 
transportation of solid waste. Not only do I believe this issue can be 
discussed separately from flow control, but I think this issue is not 
so clear cut. For more than ten years this committee has heard dozens 
of witnesses who have testified that this was a significant national 
problem, that landfills were filling up faster than we could replace 
them, and that if we did not act immediately, we would have a national 
garbage crisis on our hands.
    In response to these pleas, this committee considered and reported 
a number of bills, including S. 534, that would attempt to tackle this 
issue. Now we are back here with two year's worth of additional data. 
As I reviewed the information from around the country, it became 
obvious to me that some folks may have overstated their case a few 
years ago when they said we needed to act quickly. While solid waste is 
still being transported in interstate commerce, many States are both 
importing as well as exporting garbage. Landfill space is not the 
scarce commodity it was presented to be and tipping fees are falling.
    Nonetheless, on the horizon we see the closing of the Fresh Kills 
landfill that could change the equation, perhaps significantly. 
Attempts to control the interstate transportation of solid waste also 
raises the dilemma over what is the most appropriate level of 
government to place control over these issues. Should it be at the 
State level, or should local communities be empowered to determine 
whether they want to have solid waste facilities within their borders? 
I look forward to hearing the testimony of our New York witnesses, and 
I hope they will be able to give us some insight into how they are 
going to deal with the more than four million tons of solid waste 
generated annually in the city. In addition, I hope all of the 
witnesses will share their views regarding who should have the ultimate 
control over where solid waste materials are placed.
    I want to thank the witnesses for coming today and I look forward 
to your testimony.

    Senator Chafee. Thank you very much. Now we'll have Mayor 
John Rooney of Northvale, NJ.
    All of your statements will go into the record. Each 
witness will have 5 minutes.
    Did you have a comment?
    Senator Lautenberg. I just want to welcome Mayor Rooney, 
Mr. Chairman, and to tell you that he was among the leaders in 
the mayor community, mayoralty community in New Jersey looking 
for relief for residents. And while we didn't necessarily agree 
on the approach, he was a forceful leader in his view, and I'm 
pleased to see him here testifying today.
    Senator Chafee. Well, thank you, Senator.
    Mayor Rooney, you've got 5 minutes. Go to it. Your 
statement will be in the record.

     STATEMENT OF HON. JOHN E. ROONEY, MAYOR, NORTHVALE, NJ

    Mayor Rooney. Thank you, Mr. Chairman.
    One of the things I'd like to do is deviate a little bit 
from my testimony, and I'll make up for that in time. There 
have been some statements made today that I'd like to either 
emphasize or correct. One of the things that Senator Baucus had 
said was basically shutting down the different States from 
interstate commerce. Senator Lautenberg answered that very well 
by the fact that New Jersey tried to do this.
    The one thing that didn't come out loud and clear is why do 
we have a problem in New Jersey today. We have a problem in New 
Jersey because Philadelphia filled up our South Jersey 
landfills and New York City filled up our North Jersey 
landfills. So we're out looking for space. So that's one of the 
problems.
    Senator Coats said that he's a net importer of garbage for 
6 years. Well, New Jersey has been a net importer of garbage 
for over 60 years. And that's why we have the problem that we 
do today.
    Also, my former colleague in the Assembly, former 
Assemblyman Pascrell, Congressman now, stated about how much we 
actually lose because of flow control in New Jersey. I've 
calculated the numbers based on the average and based on the 
real costs of garbage. It comes out to over $1 million a day in 
New Jersey that we pay in excess fees for disposal.
    So that's what this is all about. That's why I'm here.
    Also, Congressman Franks said the New Jersey Assembly was 
asking for flow control. That's incorrect. The New Jersey 
Assembly has not taken a position. As a matter of fact, over 30 
of my colleagues in the Assembly have signed on to bills ending 
flow control in New Jersey. We have our own solutions in hand. 
There are a couple different versions of it. But it's our 
solution.
    A couple of things. There's one thing that kind of scares 
me. It's when somebody says, I'm from Trenton and I'm here to 
help. Well, something that scares me even more is when they 
say, I'm from Washington and I'm here to help. So please, don't 
help us.
    Now, what I want to do is give you a little background. I 
am the Mayor of Northvale. It's a little, bitty town nestled in 
the northern valley of New Jersey. The next town from me is 
Tappan, NY. I'm right on the border, I'm 3 miles from the 
Hudson River. I have under 5,000 population. We have 1.1 square 
miles.
    We're paying, right now, $103.38 a ton to dispose of our 
garbage because of flow control. I recently went out for bid to 
try to see what the free market was like. The price I got was 
$63 a ton. But that's not the low. You can see by New York 
City's rates, but they have a lot of tonnage, of $43 a ton. If 
I look at Bergen County, my own county, they're mandated to go 
to the Union County incinerator: Mr. Franks' facility. We pay 
$80 a ton to Union. We pay $16 a ton processing fee, because we 
must deliver it to North Arlington and pay a host community 
fee, too, and we pay another $12 a ton to re-transport it to 
Union County. So $116 a ton.
    Bergen County is mandated to do 192,000 tons to Union 
County. The balance of it we can go in the free market. Do you 
know what the bids are in the free market? Forty-two dollars 
and 75 cents a ton. That's what the real world of garbage is.
    So I'm here to say, and also to give you a little bit of 
other background, I'm also in the State legislature, as my 
former colleague said. I was also Commissioner on the Bergen 
County Utilities Authority. I was there for 5 years, 1983 to 
1988.
    I'm also the chairman of the Mayor's Task Force Against 
Flow Control. We now have over 240 mayors signed on against 
flow control. And somebody said, well, we have 567, why not 
567? It's because of discrimination. Some of our mayors are 
discriminated against. Me, I'm paying $103.38. Somerset County 
mayors are paying $125. We're on the Task Force.
    But if you take the commissioner of the DEP's own county, 
Burlington County, they only pay $49 a ton. Why the hell would 
they want to oppose this legislation? They don't. They want to 
keep flow control. Their mayors are interested in keeping flow 
control.
    That's the disparity in New Jersey. If we had rate 
averaging and we all paid the average of $96 a ton for our 
garbage, we would have everybody against flow control. But we 
don't. We have pockets.
    But I must tell you that 7 of the 10 large city mayors are 
on our side. Over half the population of New Jersey is 
represented by the mayors that I've talked about.
    To give you a good example of how flow control can really 
hit you between the eyes, in 1988, I was doing construction in 
my home. February 1988, I had a 10 yard dumpster sitting in my 
driveway.
    I got a call from the hauler, he said, John, if I take that 
Friday, it costs you $350. If you wait until Monday, it costs 
you $1,300. That's what flow control has done to New Jersey.
    Carbone gave us an opportunity to go out and seek lower 
rates. We said, this is great, this is something that we can 
use, that money in our budget to provide other services. 
Actually not to cut services. Everybody is trying not to cut 
services.
    I go back to the $63 a ton. If I was able to do that this 
year, I would have had a 40 percent reduction in my rates for 
garbage disposal. Would any of you up there like to go to your 
constituency and say, I'm going to save you 40 percent of this 
item in the budget, and I'm not going to reduce your services 
one bit? How would you like to take that to your constituency?
    I know I can run on it. I'm sure everyone else can. But no, 
we have to look at a situation that's going to grow and grow, 
just like topsy.
    Also on this litigation that we've formed against flow 
control, we've got other people supporting this. The 
Environmental Federation and the Sierra Club, amazingly, 
they're on our side. They're opposing flow control. We also 
have Hands Across New Jersey, this is a citizens grass roots 
movement, Common Cause, New Jersey Business and Industry 
Association, the Chemical Industry Counsel, United Taxpayers of 
New Jersey, the New Jersey Chamber of Commerce, and the New 
Jersey League of Municipalities.
    Senator Chafee. OK, Mayor, if you would wind up now, 
please.
    Mayor Rooney. That 5 minutes went quickly.
    The point of the issue is that just recently we saw New 
York City go out for garbage disposal. Forty-three dollar a 
ton, the real world of garbage. That garbage is going to come 
to New Jersey. It's going to come to the city of Newark to the 
incinerator at $43 a ton. The city of Newark pays $72 a ton for 
the same facility.
    Is that fair? No, it's not.
    The other issue is the bonds. I can discuss that ad 
nauseam. I can tell you exactly what the issues are on whether 
the bonds are going to go belly up. I can tell you about the 
issues of why one county spent over $100 million on the bonds 
and never put a shovel in the ground.
    This is what's happening under flow control. We had a 
facility in Bergen County that they, they were 2,400 tons a day 
when I was there as a commissioner. That is what we were 
projecting for the incinerator. They're now getting 600 tons.
    When they had to build a transfer station, do you know what 
they did? They built a 5,000 ton facility, 5,000 tons a day. 
Why? Because they could. Where does that 800-pound gorilla sit?
    Senator Chafee. Now, Mayor, we've cut you.
    [Laughter.]
    Senator Chafee. Commissioner Johnson.

    STATEMENT OF HON. RANDY JOHNSON, CHAIR, BOARD OF COUNTY 
   COMMISSIONERS, HENNEPIN COUNTY, MN; AND PRESIDENT-ELECT, 
                NATIONAL ASSOCIATION OF COUNTIES

    Mr. Johnson. Thank you, Mr. Chairman and members of the 
committee. I'm Randy Johnson, and I'm chair of the Hennepin 
County, Minnesota Board of Commissioners. That's Minneapolis 
and suburbs. I'm also president-elect of the National 
Association of Counties. NACO represents the 3,000 counties in 
the United States.
    We appreciate being invited to participate in this hearing. 
I, too, will depart from my prepared testimony which is being 
entered into the record. In view of previous statements, I 
think it's important that we look at the issues that are really 
not before us right now.
    The issue is not whether flow control is a good idea or a 
bad idea in the abstract for disposal of garbage. It's not 
whether a free market approach to collecting garbage, which is 
the expensive part of this whole process. It's not whether a 
free market approach to collecting garbage is better than a 
municipal government monopoly approach.
    It's not whether facilities to which garbage has been sent 
pursuant to flow control are environmentally superior to other 
facilities. And it's not whether flow control facilities will 
cost more or less over an extended time than other facilities.
    The issue before us now is whether local governments, who 
in good faith built facilities, or in most cases contracted 
with the private sector to build and operate facilities under 
competitive bid procedures, shall be able to meet their debt 
obligations without sharply increasing local taxes.
    That's why we are asking for a narrow grandfather for those 
local governments to be able to pay off their bonds and live up 
to their contractual obligations.
    Now, the question has come up nobody's defaulted yet, the 
sky isn't falling down, perhaps Congress should continue to do 
nothing. NACO had never predicted, and when I testified before, 
I never predicted that defaults were inevitable. Local 
governments in this country go to great extremes, very 
expensive extremes, to avoid the ``third rail'' of defaulting 
on bonds. As we all recall, New York City was in dire straits 
several decades ago, and yet never defaulted.
    But we have had very serious consequences, and default is 
not impossible. Here are some of the impacts. National Credit 
Rating Agencies have downgraded credit ratings for 17 local and 
State solid waste authorities since the Supreme Court threw out 
a flow control ordinance in the Carbone case 3 years ago. 
Moody's has downgraded 15 issues. Approximately half were 
downgraded to ``junk bond'' status. Standard and Poor's 
downgraded four issues. Two are now classified as junk bonds. 
Fitch downgraded three issues to junk bond status.
    In addition to downgrades, Moody's has eight additional 
bond issues under credit review. As litigation increases and 
the cases work their way through the courts, more downgrades 
are likely. The total outstanding debt that has either been 
downgraded or put on a credit watch for potential downgrading 
by the rating agencies since Carbone is over $2.3 billion.
    What does it mean? It means that the next time local 
governments try to go to the bond market to borrow funds for 
other public projects, like bridges and roads, or schools, they 
may be unable to find any market for those bonds. For those 
local governments who are able to find buyers of their debt, 
the interest rate will be significantly higher, and local 
taxpayers will make up the difference.
    But it's not only downgrades that we're concerned about. 
We're seeing other detrimental and expensive effects from 
Congressional lack of action on flow control.
    Attached to my testimony is our Think Again sheet, which 
outlines and details a number of local governments and what 
they have had to do over the last 3 years to try to avoid 
defaulting. My county, for example, has been sued by four 
businesses and some individuals in a class action regarding our 
flow control ordinance.
    A year ago, the Federal court certified a class consisting 
of virtually every Hennepin County commercial and residential 
waste generator. The Court already found the ordinance violated 
the Commerce Clause of the Constitution, because as Carbone 
held, only Congress has the authority to decide who will 
regulate garbage that crosses State lines.
    Now in May, we will begin trying the second phase of the 
Hennepin County case, the exact amount of the alleged damages. 
Plaintiffs are claiming $154 million, nearly one half of 
Hennepin County's total annual property tax levy. To add insult 
to injury, if the court allows this case to proceed to final 
judgment because Congress has not acted, Hennepin County 
taxpayers will also have to pay millions of dollars in 
plaintiffs attorneys fees. Other lawsuits have been filed, more 
are threatened.
    One of my concerns is that Hennepin County will become the 
poster county for the rest of the country. We will reach the 
first decision; this case is farther along than the others. We 
would like Congress to act before that case reaches final 
judgment.
    In other counties, similar difficult impacts are occurring, 
in Florida, Maryland, New York, North Carolina, Iowa, and 
Virginia, all have already had to increase local taxes and 
phaseout recycling programs. We're also seeing that the loss of 
flow control allows waste haulers in some communities to 
continue to reduce their costs, but they do not pass the 
savings on to the waste generators.
    The debate over flow control is not really a disagreement 
between the public sector and the private sector. Local 
governments acted in good faith under the laws that our States 
adopted. We attempted, did the best we could to interpret 
Federal law. We built and entered into competitively bid 
contracts to build facilities that are now being undercut by 
what we think are temporarily cheap landfills and some other 
facilities.
    Similar to the electric utility restructuring debate, 
however, what we're seeking is a way to cover our stranded 
investments in these facilities. It is only equity that we are 
asking for, nothing more. We're asking for a narrow grandfather 
for those cities and counties and local governments who acted 
in good faith. We tried to solve local problems in the way that 
they have traditionally been solved in this country, at the 
local level on a local basis.
    We urge you not to tie our hands. We urge you to pass a 
narrow grandfather bill so that we do not have to explain to 
our local taxpayers why Congress has forced us to increase 
local taxes.
    Thank you very much, Mr. Chairman and members of the 
committee.
    Senator Chafee. Thank you very much, Mr. Commissioner.
    Mr. David Leff, assistant commissioner for Policy and 
Planning, Connecticut Department of Environmental Protection.
    Senator Lieberman, he's your esteemed constituent.
    Senator Lieberman. Yes, he is, and a neighbor to your 
esteemed constituents, Mr. Chairman.
    I was with David Leff yesterday in New Haven, where we 
talked about brownfields legislation. I'm delighted he's here 
for the Department and for Governor Roland. We welcome him and 
look forward to his testimony.
    Thank you.
    Senator Chafee. Thank you. Go to it, Mr. Leff. If you would 
restrict your comments to the 5 minutes, we'd appreciate it.

STATEMENT OF DAVID K. LEFF, ASSISTANT COMMISSIONER, CONNECTICUT 
             DEPARTMENT OF ENVIRONMENTAL PROTECTION

    Mr. Leff. Yes, sir. Thank you, Senator Lieberman.
    Senator Chafee, members of the committee, I bid you good 
morning. My name is David Leff, I'm an assistant commissioner 
with the Connecticut Department of Environmental Protection. 
With me today, behind me is Robert Wright. He's the acting 
president of the Connecticut Resources Recovery Authority, 
which has financed and built four of Connecticut's six resource 
recovery plants.
    I want to thank you for having me here this morning to talk 
about the effect of a lack of flow control on the State of 
Connecticut, and to tell you why the Carbone decision is having 
a negative impact on our State.
    Over a decade and a half ago, Connecticut realized that it 
could no longer use the traditional landfill for disposal of 
waste. We were reaching capacity of our landfills. They were 
polluting our water, including our drinking water. There were 
new sites that were unacceptable to the public. As responsible 
officials, we did not want to foist our problem on other 
States. We decided that we were going to try to be self-
sufficient in our disposal of solid waste.
    Waste-to-energy facilities seemed a very good idea at the 
time. Not only would they take care of our garbage, but through 
the generation of electricity from solid waste they would avoid 
the need for use of imported oil.
    But these projects are expensive: in Connecticut, $750 
million of bonded debt for six facilities. At the time the 
projects were developed, fixed costs were to be paid from a 
combination of energy revenues and tipping fees. In order to 
allow project financing to go forward, and it was necessary for 
project financing to go forward, long-term waste contracts had 
to be entered into with the facilities, guaranteeing a minimum 
tonnage. These are the so-called put or pay contracts.
    In my State, 137 of Connecticut's 169 towns have such 
contracts. That represents 86 percent of our population. 
Without flow control, haulers are free to dispose of the waste 
of committed towns to other facilities. Less waste means that 
member town tipping fees go up while the desperate need to 
attract spot market waste drives spot market prices ever lower. 
It is a very vicious cycle.
    This puts an unexpected financial burden on our 
municipalities. It could ultimately lead to the destruction of 
these facilities which dispose of our solid waste in an 
environmentally sensitive and progressive manner. It also 
discourages recycling, because as towns seek to increase the 
amount of waste they deliver to facilities, they are loathe to 
take paper and other recyclables out of the waste stream and 
put them back to productive use by re-use, instead sending them 
off to be burned.
    Why has the system not collapsed 3 years after Carbone? 
This is a slow downward spiral. In this case, the world doesn't 
end with a bang, it ends with a whimper.
    Also, many haulers held off diverting waste until they saw 
whether Congress would act. Now that Congress has not acted, 
diversion of waste is accelerating. Connecticut State and 
municipal officials have dealt with solid waste in a forward 
looking and responsible manner. But the Carbone decision has 
changed the rules in the middle of the game.
    That is fundamentally unfair. These facilities were built 
using reasonable economic and legal assumptions. Those 
assumptions ought to last for the life of the bonds and the 
life of the contracts involved.
    Thank you very much.
    Senator Chafee. Thank you very much, Mr. Leff. We 
appreciate that.
    And now Mr. Grover Norquist, president of Americans for Tax 
Reform.

 STATEMENT OF GROVER G. NORQUIST, PRESIDENT, AMERICANS FOR TAX 
                             REFORM

    Mr. Norquist. Mr. Chairman, members of the committee, my 
staff has proposed a real bang-up written testimony here that I 
commend to your reading at another point. But to stay within 
the 5 minutes, I'd just like to address a few of these issues.
    First, under truth in testimony, Americans for Tax Reform 
receives no Federal funds, State funds, county or taxpayer 
funds. And for purposes of this discussion, no support from any 
interested industries.
    But I am interested in this as a taxpayer organization. We 
work with taxpayer groups in New Jersey that have been 
mentioned, United Taxpayers of New Jersey, and Hands Across New 
Jersey. We've heard from political leaders in New Jersey about 
the upward pressure on taxes because of flow control. Flow 
control is a tax. It is a tax to support inefficient government 
enterprises, and it is a tax that is levied on consumers and on 
taxpayers.
    If the enterprises--incinerators to burn garbage or 
landfills to dispose of garbage--were efficient, they would not 
be asking for legal protection in forcing consumers in their 
direction. These institutions should either be sold into the 
private market or, if they want to remain in the hands of the 
Government and not go out and loot taxpayers, they should go 
and get market prices for their goods.
    The whole world is moving toward free markets, freedom of 
contract, freedom of movement, toward freer trade around the 
globe. I have gone to Poland, Bulgaria, Eastern Europe, 
advising some of those countries on how to move to a free 
market. If when I was in Bulgaria, somebody said, hey, we've 
got this great plan, it's called flow control, isn't this a 
good idea, I would have said, no. Get rid of that. That belongs 
to another era. Move to the free market.
    It seems to me that if we're advising the rest of the world 
to move toward a free market and away from State-ism that we 
ought to at least not go in the wrong direction ourselves.
    I'm very concerned about this legislation. I was opposed to 
flow control or bans or limits on interstate commerce before 
these hearings. But having heard the earlier panel in this one, 
I'm even more concerned. I thought the Constitution was a good 
idea. I think the Takings Clause is a good idea. I think the 
Commerce Clause was a good idea.
    I understand Patrick Henry's concern that moving from the 
Articles of Confederation to the Constitution might raise some 
problems, but I really did think that the Commerce and the 
Takings Clause were tremendous improvements over the Articles 
of Confederation. I think to throw those out is a big mistake, 
that we don't all grow our own wheat in our own backyards, our 
own counties or our own States. We don't get our own coal from 
our own counties or our own backyards or our own State. We 
don't bury our dead in our own cities and towns.
    I don't understand why you'd want to put those kinds of 
restrictions by State, and if not by State, why not by county, 
and if not by county, why not by city. Why not get rid of the 
free market altogether. It seems to me that moving toward more 
State control, government control of this, in order to 
subsidize inefficient government-run entities is the exact 
wrong direction to go. Having listened to the earlier 
discussions in the earlier panel, I thought it was a bad idea 
before. I think it's a truly horrible idea and destructive idea 
now.
    At Americans for Tax Reform, we do rate tax votes and 
because this is a tax on consumers, specifically designed to 
subsidize failed and failing and costly government enterprises, 
the kind that we tell the politicians to get out of the 
business of doing that, we're going to be rating this vote as a 
bad vote on the tax issue itself in this year.
    Bad ideas in the private sector go bankrupt. Bad ideas when 
the Government runs them, they want to stick an I.V. in the 
taxpayers to fund it. It's a big mistake. I would urge you to 
defeat this legislation. And I stayed within the green.
    Senator Chafee. You certainly did, and you made your point 
clearly.
    Mr. John Broadway, Virginia State director, National 
Federation of Independent Business. We welcome you here, Mr. 
Broadway, and go to it.

STATEMENT OF JOHN BROADWAY, STATE DIRECTOR, VIRGINIA, NATIONAL 
               FEDERATION OF INDEPENDENT BUSINESS

    Mr. Broadway. Thank you, Mr. Chairman.
    On behalf of 600,000 members of the NFIB across the United 
States, and over 11,000 in the Commonwealth of Virginia, I'm 
glad to have an opportunity to present the views of small 
business.
    By way of introduction, NFIB is the Nation's largest 
business association. About 50 percent of our members are in 
the service and retail industries. About 25 percent are in 
manufacturing and construction, and the rest in businesses 
ranging from agriculture to wholesale services. Our typical 
member has about five employees and grosses about $350,000 
annually.
    The vast majority of small businesses are customers of 
waste disposal services, NFIB also represents a number of small 
haulers and recyclers. Consequently, any efforts to maintain 
and expand the use of flow control ordinances negatively 
affects the small business community. Flow control ordinances 
force waste disposal customers to use Government mandated waste 
management facilities and create monopolies, which small 
business owners, and in fact all customers, will most likely 
pay higher costs.
    By their very nature, monopolies give an advantage to one 
entity at the expense of all others. Because monopolies don't 
have to face free market competition, customers have no power 
to bargain for better rates and service.
    Flow control ordinances have their most obvious impact on 
price. In communities where there are no such ordinances, both 
large and small haulers, processors and recyclers compete for 
market share. By contrast, where these ordinances do exist, 
prices are artificially set, and in some instances, as you've 
already heard this morning, prices are artificially set, and 
they in fact may be inflated to pay for other Government 
services. These monopolies limit choice and place a very real 
tax on small business.
    Another impact of these ordinances is inefficiency. 
Government-backed facilities don't have to seek business to 
stay in business. They are guaranteed a return on their 
investment, there's no incentive to improve the disposal 
facility, to implement new technology or to attempt to cut 
costs. And certainly, there's no incentive to pass on savings 
to their involuntary customers.
    As I mentioned at the outset, we also represent a number of 
haulers and recyclers. With flow control ordinances in place, 
it's highly unlikely that these small businesses will be able 
to compete for long-term contracts. They will, in effect, be 
shut out from having any opportunity to provide such services.
    We do not agree with the proposition that waste management 
requires flow control. Such management by local governments can 
be performed through regulating the quality of service, not by 
performing it themselves or by establishing long-term exclusive 
contracts.
    In fact, there is a good example of this process taking 
place presently in Virginia. A few years ago, the city of 
Richmond and several surrounding localities formed the Central 
Virginia Waste Management Authority. One of their goals has 
been to maximize existing private waste management company 
participation.
    The director of that authority, Kevin Burns, has written an 
article on this subject, and I would like to just quote three 
sentences from his article in which he says:

    Unlike most other regional authorities, this authority has 
implemented all of its programs through private service 
contracts for recycling and other waste management services. 
The result has been the development of an integrated regional 
waste management program. The public's investment in contract 
services has stimulated the creation of private competition 
jobs and the private tax base.

    Now, regrading the subject of the grandfathering clause. 
While small business owners do not support the concept of flow 
control ordinances, we're not insensitive to the problems in 
many communities that do in fact have these facilities in 
place. If the committee does approve flow control legislation, 
we would strongly urge that only a strictly limited provision 
be established relative to a grandfathering clause. We do not 
believe that communities with ongoing programs should be 
mandated to live under flow control into eternity.
    In conclusion, I would just state that NFIB urges the 
committee to consider the negative consequences of establishing 
long-term monopolies that force small businesses to purchase 
services from a single supplier. We do not believe it's in the 
best interest of the Nation or the small business community.
    Senator Chafee. Thank you very much, Mr. Broadway.
    Just a couple of brief questions. I don't understand why 
the rates on these facilities are so high. Is there a 
suggestion, Mayor Rooney, that they're inflating their charges, 
that because they've got a captive market that they are 
charging way more than what the going rate--I'm going to ask 
you, Commissioner Johnson, the same question. Because there 
seems to be a suggestion here that when these places have flow 
control that they are outlandish in their charges.
    Mayor.
    Mayor Rooney. Actually, when these facilities were mandated 
way back in the 1970's, actually it occurred in the 1980's, 
when we had to go out and build the incinerators, most of them 
were done with no big contracts. And county authorities who 
have autonomous, anonymous people on them, they just decided to 
go out and pick whoever showed them the best plant in Europe or 
somewhere else in the world.
    That's how some of these plants were chosen. They were 
overbuilt, they were just not competitively done. The bonding 
was done without any competitive--in fact, I questioned the 
bonding at the time. There was a commission of 1 and \1/2\ 
percent for the bond issues that went out, when the actual 
market value was about \3/4\ percent on issues that size.
    So they did nothing that was competitive. They were free 
operators, as the 800-pound gorilla was, you know, anything he 
wants, he's got. And we couldn't even protest.
    Senator Chafee. OK. Commissioner Johnson, what do you say 
to all this?
    Mr. Johnson. Mr. Chairman and members of the committee, 
modern waste-to-energy plants, modern compost facilities, cost 
more than burying garbage in the ground in the short run. As 
Mayor Rooney himself said, local governments were mandated to 
do this. We were mandated to do it by State law. Many of us 
thought that that's what the intent of RCRA was.
    Most of the plants, and I can't speak for every single 
plant and facility in the country, most of these plants were 
indeed competitively bid. The bonds were sold in a competitive 
sale. Pollution control requirements from State agencies, as 
well as the EPA, are very strict on these facilities. Extremely 
strict and very expensive.
    Senator Chafee. I understand that. But the suggestion from 
the testimony is that the prices they're charging are way over 
where they could be. In other words, I guess Mayor Rooney said 
they are awash with cash.
    Mr. Johnson. Mr. Chairman, I hear that. But I can tell you 
that's not the case in my county or in any other facility with 
which I'm familiar. Now, one of the things that we were told to 
do was run these like a business. That involves providing 
reserved funds, which a business would do. That's not awash in 
cash. That's just prudent management. I'm not aware----
    Senator Chafee. My time is up.
    Mr. Johnson [continuing]. Of facilities being awash in 
cash.
    Senator Chafee. Mayor Rooney, very briefly now.
    Mayor Rooney. Yes, very briefly. There's a good example, 
when flow control ended in New York, the Hempstead Incinerator 
at that time was charging approximately $103, $104 a ton, 
getting no garbage. Today without flow control, that facility 
is between $60 and $65 a ton, getting all the garbage it can 
handle. They've been made to be competitive and they can be 
competitive, and they're operating fine.
    Senator Chafee. Senator Baucus.
    Senator Baucus [assuming the chair]. Thank you, Mr. 
Chairman.
    Mr. Johnson, this is not a question for you on flow 
control, rather a subject of the next panel, interstate waste. 
As I understand it, you're going to be chairman of the National 
Association of Counties. It's further to my understanding that 
the organization in the past has favored interstate 
legislation, that is, to allow local communities to have more 
control of their own destiny, and that is, limit to some degree 
out-of-state garbage into those counties, is that accurate?
    Mr. Johnson. Yes. Senator Baucus, NACO's position is to 
support an interstate waste bill. We think that's important as 
part of State decisionmaking. We think that a lot of the 
problems that are connected with exporting waste can be 
ameliorated if we have flow control so local governments can 
take care of their own garbage. I mean, we're willing to do 
this.
    But we do support an interstate bill.
    Senator Baucus. Thank you.
    Mr. Norquist, do you favor a grandfather provision in flow 
control?
    Mr. Norquist. No.
    Senator Baucus. No grandfather whatsoever?
    Mr. Norquist. If you're charging above market rates for the 
taking of garbage, that doesn't solve any problem. What they 
ought to do is either sell off the facility, privatize it, 
reduce the debt that they entailed, or go to market-based 
prices. The other says, we're going to take money from 
taxpayers to pay off the bondholders, and we're going to do 
that by gouging consumers and taxpayers. That doesn't solve any 
problems.
    Senator Baucus. What about those communities that relied on 
the law and built a facility?
    Mr. Norquist. That were forced to do that by the law?
    Senator Baucus. They built the facility, relying upon then-
current law, before the Carbone decision.
    Mr. Norquist. Before the Carbone----
    Senator Baucus. A lot of people around here talk about, let 
the local community decide what it wants to do, you know, local 
control, and that's what the local folks decided to do.
    Mr. Norquist. Right. But local control starts with 
individuals running their own lives and making their own 
decisions. The county getting together and saying to people, 
we've captured you as consumers, and we're going to make you 
pay the rates that we want. Of course, government monopolies 
charge too much and are wasteful, from Afghanistan to Zaire, 
from 2000 years ago----
    Senator Baucus. Whoa, wait a minute. We're not talking 
about Zaire and Afghanistan right here. We're talking only 
about the United States of America. So I'm just curious, so you 
do not favor any kind of grandfather provision?
    Mr. Norquist. No.
    Senator Baucus. You oppose any grandfather whatsoever?
    Mr. Norquist. Yes.
    Senator Baucus [assuming the chair]. Thank you.
    Senator Lautenberg.
    Senator Lautenberg. Thank you very much, Mr. Temporary 
Chairman.
    [Laughter.]
    Senator Baucus. Any time.
    Senator Lautenberg. We seize the initiative.
    Senator Baucus. Right, absolutely. Speaking of Zaire.
    [Laughter.]
    Senator Lautenberg. Mayor Rooney, good to see you, and you 
know that I share your view that the residents, taxpayers ought 
to pay as little as they have to. The problem is that we got 
into a situation because of the fear and the worry that one day 
the borders were going to be shut down on us.
    Now, what happens? You've heard Senator Coats and Senator 
Levin and Senator Specter talk about restricting interstate 
garbage transfer. Lots of members agree with them. What happens 
if you're forced to stay in New Jersey and we have no choice? 
Then what do we do?
    Mayor Rooney. Well, it's, we've wasted millions and 
millions of dollars for the last 8 years, 9 years or so that 
basically that hasn't happened and that there was lower 
alternatives out there. I'm hoping that this doesn't happen, 
that the interstate ban doesn't happen and that States will 
take their fair share, as New Jersey did. The only reason we 
have no landfill space available is because of New York City 
and Philadelphia.
    Senator Lautenberg. I'm with you, so----
    Mayor Rooney. There are States and there is industry out 
there that believes that they can have an industry of garbage, 
of landfill and garbage. But there's also other things that 
could happen. Under flow control, we have this mandated system 
that's extremely high. It can be better without flow control. 
If we got rid of flow control, they would be forced to be more 
competitive. I'll give you an example of New York, the 
incinerator, where----
    Senator Lautenberg. They would be better off lowering their 
rates and having some revenue----
    Mayor Rooney. Right.
    Senator Lautenberg [continuing]. Than not have any revenue 
and just waiting for the free market to bury them in 
bankruptcy.
    Mayor Rooney. What's happened under flow control is that 
we've created an underground economy. We've created a 
diversion. We almost have prohibition out there, where it's 
more profitable to divert garbage than it is to send it to the 
proper facility. So that's what's been happening. The diversion 
in all of these States is just tremendous. That's bad for all 
of us. It costs our taxpayers those dollars.
    Senator Lautenberg. I think the principal thing, because of 
the limited time here, is that I want all to recognize that 
there is a link that most see between flow control and 
interstate transfer of trash. I would caution you that we could 
arrive at a situation which would invite terrible retaliation. 
If someone's going to say, you can't ship garbage, and you 
heard me say before, you can't ship coal, you can't ship other 
stuff, it would be awful.
    So I think at some point, and one of the things I would 
tell you, Mr. Norquist, that distressed me in your testimony, 
is that you referred to almost a political or some economic 
ideology without once approaching what we do about the problem. 
This is a very complex issue. No one enjoys having their trash 
carted out-of-state. It's something that we are forced to do.
    We used to take it in New Jersey, we went to the Supreme 
Court, perhaps you heard me say it before, Supreme Court denied 
us any restraint there. As Mayor Rooney said, we're filled up 
because of what happened in those States. It's going to come 
back to us.
    But I like it when a witness says, OK, here's the problem, 
here's what we think, and not a lecture on what kind of 
economics system ought to prevail.
    Thank you.
    Senator Chafee [resuming the chair]. Senator Sessions.
    Senator Sessions. Well, I like the economic system Mr. 
Norquist talked about.
    I do, I'm somewhat troubled by the impact I think it will 
have in at least one area of Alabama that they've entered into 
reliance on the Government that certain things would be 
appropriate. In theory, I think you're probably correct, that 
we could, other forces would take over and it may just be as 
well to do one way or the other, not have grandfathering. But I 
think for the disruption and the turmoil it would cause, it may 
not be necessary.
    Let me ask this. I thought it was interesting, the Senator 
from New Jersey talked about it, I find it difficult to justify 
under the commerce clause absolute blocking of the transfer of 
any substance in America, that you feel like, and I think I 
understood you to agree with that.
    Mr. Norquist. Yes. I didn't realize that the commerce 
clause was a matter of debate here, or wasn't the American 
approach to how we handle it. I didn't know it was an economic 
theory or something. I thought it was kind of important.
    Senator Sessions. Things like nuclear waste, I think it's 
perfectly rational, almost irrational for this Nation not to 
identify a location in this country to place nuclear waste and 
set about to do it. You take the places that would be most 
conducive to that, and you use that land or property for it.
    We've done that with regard to Nevada, and we can't seem 
politically to have the will to follow through. It amazes me 
how much it's costing this Nation in terms of tax on citizens 
and the utility rates, because this Nation doesn't have the 
will to follow through on a perfectly rational plan to dispose 
of nuclear waste.
    Mr. Leff, you mentioned something, I'm not quite sure I 
understood it, but it was that the spot market, the tipping 
fees for garbage are dropping?
    Mr. Leff. Yes.
    Senator Sessions. To me, that is a thing to rejoice. You 
seemed, you were suggesting that it was not a good thing. I 
think that would be wonderful, as long as we're not disposing 
of it in an unsafe way.
    Mr. Leff. Well, what happens is that haulers will divert a 
member town's waste to another facility and be able to command 
a lower price on the spot market. The reason that the spot 
market prices have gone down is because the facilities are 
competing for some amount of waste at any price because they're 
not getting the waste that's guaranteed to them under the 
contracts.
    If we were to restore flow control in Connecticut, it would 
lower the tipping fees for 86 percent of our population.
    Senator Sessions. You think it would lower the costs?
    Mr. Leff. Yes, it would. It would, because then the waste 
that is supposed to go to the particular facilities would go to 
those facilities, and they would be getting more waste and it 
would spread the fixed costs over a greater number of tons of 
waste.
    Senator Sessions. Any other comments on that?
    Mayor Rooney. I think it's the opposite. Because last year, 
the rates were about the lowest. They've come back up. Right 
now, as far as Groves Landfill in Pennsylvania, just over the 
border from New Jersey, it was down as low as $26 a ton last 
year, now I understand it's up to about $36 a ton. So we see it 
going up in the Pennsylvania landfills, and I differ with the 
opinion.
    Senator Sessions. Well, it's a very, very difficult issue, 
and it's important for the Nation. Mr. Chairman, that's all I 
have.
    Senator Chafee. Thank you, Senator.
    Senator Lieberman.
    Senator Lieberman. Thank you, Mr. Chairman.
    This has been an interesting and important discussion. As 
Mr. Leff's testimony indicated, this is a very important issue 
to Connecticut. Not only Mr. Norquist has invoked the interest 
of taxpayers here today. The problem here is, which taxpayers? 
In other words, the interest of taxpayers has been both on 
behalf of reinserting flow control and the interests of 
taxpayers has been invoked as beneficiaries of no flow control.
    So it obviously depends on which taxpayers. It happens, if 
your taxpayers are part of an area which hooked into a contract 
to build a waste to energy facility, which was thought to be 
the progressive thing to do--I was thinking about something 
Senator Sessions said. I'm not taking it out of context, I 
don't mean to, but the old legal concept of action and 
reliance, there's a certain sense here in which a lot of 
communities around the country acted in reliance on what was 
the world at that time, which was changed, and made financial 
commitments.
    These are big plants, you had to have a clear revenue flow, 
not to mention the garbage flow. But that came with the 
revenue. When the Carbone decision of the court changed that, 
suddenly the revenue wasn't there.
    So I want you to go back, let me first say, in response to 
Senator Smith's question about, and it's a very important 
question Senator Smith raised, in terms of the Congress' 
response to this problem. Because here's somebody, Senator 
Smith worked very hard with Senator Chafee to fashion a 
compromise. And as he said, he was told over and over again, 
that in regard to this problem, the sky is falling. Here we 
are, 2 years later, and it doesn't look like the sky is 
falling.
    But I want to ask you, from your testimony, to invoke 
Senator Smith's metaphor, it sounded to me as if you were 
saying, Commissioner Leff, that the sky was falling, but a 
little more slowly than we had thought it might. Correct?
    Mr. Leff. Yes. I would liken it to a slowly descending fog, 
rather than a ceiling plaster collapsing on you. There was a 
hope out there that Congress would act shortly after the 
Carbone decision and many haulers maintained that as well. They 
were waiting to see, and the diversion recently has increased.
    Senator Lieberman. So what are the consequences? In other 
words, we've had one project in our State downgraded, another 
is on an unstable credit watch. What actually has happened on 
the ground? What are the consequences to those changes?
    Mr. Leff. Let me if I may defer to Mr. Wright, from the 
Resource Recovery Authority.
    Mr. Wright. You've had two things occur. First, if you take 
the Bridgeport facility, what's happened there is the towns 
have done the responsible thing, and rather than ignore their 
obligations, they've raised their tip fees. So that the towns 
that are committed, at least for the residential waste, which 
actually shows up at the plant, the tip fees continue to rise, 
and as a consequence, the amount of waste continues to drop, 
causing further increases in the tip fee and further drops in 
the deliveries.
    So it's spiraling up until at one point it may become 
intolerable.
    The other thing that's happened is you've had a couple of 
communities, Madison and Guilford have actually sued to try and 
get out of their obligations. Ultimately, that litigation was 
settled. But that is a threat that hangs over all the projects, 
that the municipal security that's provided for all these 
projects may be yanked out by a superior court judge one day. I 
don't expect that those are a good case, but you don't know 
what will happen once that's thrown into the legal system.
    Senator Lieberman. Thanks, my time is up.
    And just to draw a conclusion, Mr. Chairman, briefly, from 
what you've said, I believe the response explains in your 
answer earlier, Mr. Leff, the quandary that Senator Sessions 
posed. In fact, and again, it's because 86 percent of our State 
is covered by waste to energy facilities, and the contracts 
going with them. The absence of flow control has raised tipping 
fees. The reassertion of flow control, in our case, because of 
the system we bought into in the State, will lower tipping 
fees, and therefore, lower taxes at the municipal level.
    Mr. Leff. You are absolutely correct, Senator.
    Senator Lieberman. Thank you.
    Senator Chafee. If I understand, that's because currently, 
in the spiral effect, some of it's going out-of-state or going 
some place else, and whereas, if it was all, if flow control 
continued, then the volume would bring down the tipping fee. Is 
that the point you're making?
    Mr. Leff. Absolutely, yes.
    Senator Chafee. Fine. Thank you. Thank you very much.
    Now, we want to thank this panel, it's been a very fine 
panel. And we'll go to the next panel, and if you'd come 
forward, please. That's Mr. Seif from the Pennsylvania 
Department of Environmental Protection; Mr. John Cahill from 
New York; Mr. Randy Mastro from New York City; Mr. David Olson, 
Dakota Resource Council; and Mr. Tony Ciofalo, on behalf of the 
Allied Waste Industries.
    Now, gentlemen, regrettably, I am unable to stay. Senator 
Baucus is kind enough to indicate that he would handle the 
hearing. I have staff here, plus we'll have copies of your 
testimony and the record will show. So I'm very interested, I 
sincerely apologize, because I'll have to leave into your 
testimony.
    Mr. Seif.

    STATEMENT OF JAMES M. SEIF, SECRETARY OF ENVIRONMENTAL 
PROTECTION, PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION

    Mr. Seif. Good morning, Mr. Chairman. Thank you. This is my 
second appearance here.
    Senator Chafee. Yes, you're getting to be a regular. You 
can get a commuter ticket.
    Mr. Seif. A tribute not to my eloquence, but to your 
patience, I'm sure.
    You remember the movie: ``If you build it, they will 
come.'' That is Pennsylvania's experience. Pennsylvania in 1987 
had basically the status of a backward nation: 1,100 unlined 
landfills, no State plan, no county plans, virtually no 
recycling, only 18 months of capacity left in our State. The 
free market had done its thing, I'm afraid.
    In 1988, we invested an enormous amount of capital, 
including political capital, which is what it takes to solve 
these kinds of problems, in passing and implementing our Act 
101. We now have 67 rational county plans, only 51 landfills, 
all state-of-the-art, double lined, recycling at 20 percent and 
rising toward our statutory goal, and I hope beyond, of 25 
percent.
    We had capacity for up to 10 years as a result of these 
expensive steps. I say had, because at that point, our reward 
for a good deed set in. The numbers appear on page 4 of my 
written testimony. They are mind-numbing in their volume. They 
numb the olfactory sense as well.
    What do we want? Well, we don't want more regulation from 
Washington. We don't want any money from Washington. We don't 
want a ban, or the right to impose a ban. We don't want you to 
change the natural economic trash sheds of the Nation to fit 
State borders where they don't quite fit. We don't suggest that 
New York City become self-sufficient in trash or food 
production any more than we think Somerset, PA should have a 
stock exchange or an opera.
    What we do want is for the Congress to accept the court's 
invitation to give us the capacity to protect ourselves, 
protect our investment, and to give all States the capacity and 
the will to grow a system that is at least somewhat like ours, 
and at least as successful. Specifically, on page 7, the 
elements are set forth of what we would like to see. The bill 
passed last year has those essential elements, though I would 
agree with Senator Lautenberg that conditions continue to 
change, and it may be that we should be in discussions with the 
House and others, other States, on some of the provisions.
    Pennsylvania is upstream of the Chesapeake Bay. We are 
doing our best to act responsibly toward it. We are downstream 
of the air pollution caused elsewhere in the Nation. And we are 
downstream of the trash stream. As the real estate agents say, 
location, location, location. I guess we measure up in that 
regard.
    But it's not just location, it's the fact that we achieved 
efficient, risk-free, from the environmental sense, efficient 
landfilling capacity. We built it, and they came. We don't want 
to unbuild it, we would just like to see others build it. We 
would like the right to adopt, especially through community and 
local community action, some protections on our investment, 
some protections on the environment of Pennsylvania.
    We will look forward to working with you to realize that 
opportunity.
    Senator Baucus [assuming the chair]. Thank you, Mr. Seif.
    Our next witness is Mr. Cahill, commissioner, New York 
State Department of Environmental Conservation.

    STATEMENT OF JOHN CAHILL, COMMISSIONER, NEW YORK STATE 
            DEPARTMENT OF ENVIRONMENTAL CONSERVATION

    Mr. Cahill. Thank you, Senator.
    Thank you for giving New York State the opportunity to 
express our interests and concerns on this very important 
issue.
    I think it's appropriate to start off to give an overview 
of what New York State has been doing on the issue of flow 
control and interstate waste. In 1988, New York State passed 
laws which established a hierarchy that prioritizes waste 
reduction and re-use and recycling as the proper ways to handle 
our solid waste.
    One of the things that I've noticed that has been missing 
this morning in discussion is the importance of waste 
reduction, recycling as appropriate tools in solid waste 
management. Since 1988, recycling has more than quadrupled in 
the State of New York, from 2 million tons per year in 1988 to 
over 8.5 million tons in 1995. New York State is leading the 
Nation in recycling, in that we have a recycling rate of 35 
percent compared to the nationwide average of 24 percent.
    Some solid waste still must be incinerated or landfilled. 
Approximately 80 percent of New York State's waste is disposed 
in New York State's borders. The remaining 20 percent goes to 
facilities in Pennsylvania, New Jersey, Connecticut, 
Massachusetts, Virginia, West Virginia, Ohio, Indiana, and 
Illinois. Most of the waste sent out-of-state goes to private 
facilities, many with host community agreements. The remainder 
supplements the capacity from municipal landfills, thus 
reducing the burden on local taxpayers.
    With respect to the issue of flow control, in contrast to 
most States, New York has had a history of municipal 
development and operation of solid waste disposal facilities. 
Our laws have put the burden on local governments to recycle 
and reduce solid waste. This has led to a need for flow control 
to create economically viable, environmentally sound solid 
waste management systems. The issue of flow control is critical 
to many communities in New York State.
    One of the previous speakers mentioned the Hempstead 
facility, which is in Nassau County, as having truly benefited 
from the flow control. The reason for that is simply that there 
is a continuous large waste stream from lower New York. I would 
compare that to our Warrensburg, Washington County facility in 
upstate New York, in a rural area along the Canadian border. 
They took the initiative about a decade ago to build an up to 
the top of the line resource recovery facility, on the 
expectations that flow control would be in effect and would 
allow them to control their waste.
    These two counties, Washington and Warren, as I mentioned, 
small, rural communities, who will do anything to make sure 
their communities do not go into default. The fact that they 
haven't been in default at this time I think is a tribute to 
their perseverance and their dedication as local community 
leaders.
    However, while they may not be in default now, it seems as 
though that will be inevitable, unless there is some 
grandfathering provision under the flow control.
    With respect to New York City's approach to solid waste 
management, I will defer most of the comments to Mr. Mastro on 
this. But last year, Governor Pataki signed legislation to 
close Fresh Kills landfill in Staten Island. Fresh Kills is the 
largest unlined landfill in the Nation. It was built in 1942, 
with the intent that it would last a couple of years and that 
it would be built to simply above grade.
    Well, here we are 55 years later, it's still operating and 
now encompasses 2,200 acres of marine wetland in Staten Island, 
and is the only remaining uncommitted, unlined landfill left in 
New York State. Failure to close Fresh Kills would only delay 
the implementation of more effective operations for waste 
reduction and recycling. New York State is not coming here hat 
in hand, looking for Federal help. Indeed, Governor Pataki last 
year showed tremendous leadership in pursuing and promoting a 
clean water, clean air bond act, which provides over $100 
million for New York City solid waste efforts.
    In particular, $75 million will be made available to New 
York City for Fresh Kills closure, and an additional $25 
million the Governor has committed for New York City to improve 
its recycling efforts. An additional $19 million in 1972 
Environmental Quality Bond Act funds, have been earmarked for 
New York City.
    Senator Baucus. I have to ask you to wrap up your 
testimony.
    Mr. Cahill. We believe, Senator, with respect to the free 
market should control the issue of interstate waste. We believe 
that host community agreements are absolutely essential. We 
look forward to working with the States and working with the 
Congress with respect to this important issue.
    Senator Chafee [resuming the chair]. Thank you very, very 
much.
    That's a good lead-in to you, Mr. Mastro. You're next.

STATEMENT OF RANDY M. MASTRO, DEPUTY MAYOR FOR OPERATIONS, CITY 
    OF NEW YORK; ACCOMPANIED BY JOHN DOHERTY, COMMISSIONER, 
                    DEPARTMENT OF SANITATION

    Mr. Mastro. Thank you very much, Senator, and members of 
the committee.
    It's my pleasure to be here on behalf of Mayor Guiliani to 
address these very important issues. If I may make the City's 
position very clear. We have submitted written statements, but 
at the outset, I wanted to say that the City strongly opposes 
any presumptive ban on interstate waste shipments, but strongly 
favors the use of host community agreements for that waste 
which is exported.
    I know there have been specific questions raised about 
Fresh Kills and our closure of Fresh Kills. So I wanted to 
discuss that plan on the City and State's part and give you 
some of the particulars on that in my limited time today.
    It's in keeping with these principles, which include our 
belief that the free market, coupled with host community 
agreements, is the best way to ensure a reasonable, fair 
pricing structure, as well as a good neighbor policy, that the 
city has not predetermined with the closure of Fresh Kills, 
where its solid waste will be disposed. This Mayor and this 
Governor, supported by a bipartisan consensus of the State 
legislature, decided to close Fresh Kills by December 31, 2001.
    But this will be a phased-in approach, each year 
diminishing the landfilling and use of Fresh Kills over that 5-
year period. We have insisted, consistent with these 
principles, that each bidder for export of a city's residential 
waste have all requisite environmental permits and a host 
community agreement, verifying that the receiving jurisdiction 
has approved the operation of the facility and agreed to accept 
the solid waste to be imported, often the result of some direct 
financial benefit to the receiving jurisdiction.
    The city will begin this diminution of landfilling at Fresh 
Kills with the export of up to 1,800 tons per day of 
residential waste from the Borough of the Bronx by July 1997. 
In this regard, it is significant that the city received six 
competitive bids for this waste. The bidders proposed seven 
different end locations in five different States; two of those 
locations being within the State of New York. It's encouraging 
that we have bids within the State, and we will continue to 
work with and urge the State to develop even more capacity, in 
part because transportation is a major element of export costs.
    But I should also add that in receiving these bids, we 
received three times the capacity in these bids for that which 
is needed to export these 1,700 to 1,800 tons per day from the 
Bronx.
    We did not stop there. We are expanding our recycling 
program and our waste reduction initiatives in an effort to 
reduce the amount of waste that will eventually need to be 
exported. In this regard, I should note that we've added more 
than $320 million to our city's financial plan to address the 
closure of Fresh Kills in an environmentally sound approach. It 
was not an environmentally sound approach for New York City to 
have all of its residential waste going to one location, 
surrounded by a heavily populated area of Staten Island. I 
think everyone recognizes that. We're trying to pursue 
environmentally sound approaches for New York City and New York 
State's long-term future, as well as the Nation's long-term 
future.
    So in that regard, we're putting our money where our mouths 
are and spending more city funds to increase recycling. We've 
increased our recycling budget by more than $76 million to try 
to reduce the amount of waste that the city has over the next 
5-year period as we diminish the use of Fresh Kills in 
anticipation of closure.
    I should add that we are the only large city in American 
that requires 100 percent of its households to recycle, 
including those in multi-family dwellings. We recycle at a 
higher percentage of household waste than any other large city 
in America. So we not only require it of 100 percent of our 
households, but among household waste, we recycle a higher 
percentage of our household waste than any other major city in 
America.
    We're going to continue to spend even more to recycle new 
materials, to increase education and outreach, to foster better 
compliance, to have new equipment to improve recycling 
efficiency, and to also include programs relating to 
residential backyard composing and other new initiatives to 
potentially expand recycling.
    Senator Baucus. I'll have to ask you to wrap up, too, 
please.
    Mr. Mastro. Certainly. In short, we are taking the steps 
not only to address exportation, but at the same time, to 
reduce the amount of waste that we produce in anticipation of 
Fresh Kills' closure. It is our expectation that by advancing 
waste reduction and recycling over the next 5 years, the city 
will reduce the amount of export. But we are confident that the 
capacity and desire to accommodate this waste exists. I 
reiterate that our city's residential waste will only be sent 
to communities that have agreed to receive it through host 
community agreements.
    Thank you very much.
    Senator Baucus. Thank you very, very much.
    Mr. Olson, you're next.

 STATEMENT OF DAVID L. OLSON, DAKOTA RESOURCE COUNCIL, WESTERN 
               ORGANIZATION OF RESOURCE COUNCILS

    Mr. Olson. My name is David L. Olson. My family and I 
operate a family grain farm south of Minot, ND. I am here to 
testify on behalf of myself and my community, and as a member 
and officer of the Souris Valley Chapter of Dakota Resource 
Council, one of the six groups that make up the Western 
Organization of Resource Councils.
    My expertise on the interstate transportation of solid 
waste comes from my observation of the effects it has had on my 
community. I live just a few miles from the Echo Mountain 
Landfill, operated by Municipal Services Corporation. Since the 
early 1990's, I have been able to witness daily the 
transporting of tons of out-of-state waste being offloaded from 
the rail head at Sawyer, ND, and then trucked to and dumped at 
the Echo Mountain Facility. The Sawyer dump receives 150,000 
tons of waste a year, including municipal solid waste and 
industrial waste from many different States around the country.
    In spite of the fact that many North Dakotans had strong 
reservations about the wisdom of siting the Echo Mountain 
facility in old coal spoils south of Sawyer, the lack of 
Federal legislation allowing States and local governments to 
control the flow of out-of-state waste into their landfills 
made it impossible to regulate garbage coming into our 
community.
    We were successful in securing construction modifications 
that offered additional protection for some water supplies. We 
were also able to require the presence of a full-time, on-site 
inspector at the facility. But we lacked the necessary tools to 
be able to make the most fundamentally important siting 
decision. Since the facility was sited, those very things 
occurred which many of us predicted, including illegal disposal 
of hazardous waste and failure to produce economic development.
    From the beginning, MSC assured the local community and the 
State legislature that its site never was intended nor would 
become a hazardous waste site. However, in 1995, we learned 
that MSC had in fact allowed approximately 198 barrels of 
hazardous waste to be buried. The waste contained levels of 
barium several times higher than allowed by law. General Motors 
was the generator of the waste, and the waste was contained in 
metal barrels. When the health department discovered the 
barium, they informed GM the barrels would have to go. Of 
course, GM maintained the barrels would be too expensive to dig 
up, and to its credit, GM did finally agree to remove some, but 
not all of the barrels of barium.
    Less than 3 months after this situation was resolved, GM 
announced it was ending its contract with MSC. Subsequently, 
MSC has lost its major contract for incinerator ash. There are 
now only six employees at the facility. Employees may decline 
even further as cells close. Needless to say, the vast economic 
benefit to the community that MSC promised never came to pass, 
and it appears slim it ever will.
    Area landowners like myself got together early in the 
1990's and speculation was rampant as to how a mega facility 
like the Sawyer dump would affect all of us in the area and how 
it would affect the whole of North Dakota. North Dakotans are a 
fairly pragmatic people. We were interested enough to contact 
other States where MSC's parent company conducted business.
    A couple of strongly needed things came out of our research 
and practical experience. The interstate waste bills that the 
Senate has passed over the years are a start. But there are 
three additional points that I urge you to consider. Most of 
these points are addressed in the interstate waste bills that 
Senator Baucus and Senator Conrad have introduced, and I urge 
you to refer to them.
    First, there's a strong need for North Dakota and other 
States to have a presumptive ban, like the one in Senator 
Baucus' bill. Second, you realize these huge facilities impact 
so much more than just the host community. A State should be 
given authority to control mega landfills. One way to do this, 
which we endorse, is to let States use a permit cap to moderate 
out-of-state waste shipments.
    And finally, in the past, some waste companies and States 
have wanted to exempt incinerator ash from this legislation. We 
think ash, which goes to the same landfills as solid waste, 
should be covered by the same laws. Only Congress can give us 
the right to decide for ourselves next time whether garbage 
disposal is the kind of economic development we want to try. It 
is certainly not my intent or the intent of our organization to 
block the siting of out-of-state waste facilities in 
communities and States where citizens can make that 
determination through democratic channels.
    Senator Baucus. I'm going to have to ask you to wrap up.
    Mr. Olson. In summary, we can be empathetic to New York, 
New Jersey, Connecticut. They do have waste problems. But in 
waste legislation, we would at least like to come to the table 
and have some saying the siting of future waste facilities in 
our State, which we do not have now.
    Thank you.
    Senator Baucus. Thank you very much.
    Finally, Mr. Ciofalo.

  STATEMENT OF ANTHONY CIOFALO, VICE PRESIDENT, CORPORATE AND 
  GOVERNMENT AFFAIRS, ALLIED WASTE INDUSTRIES, AND CHAIRMAN, 
              ENVIRONMENTAL INDUSTRY ASSOCIATIONS

    Mr. Ciofalo. Good morning. On behalf of the National Solid 
Waste Management Association, I do thank you for the 
opportunity to testify.
    NSWMA members collect, recycle and dispose of America's 
waste in all 50 States. Our members range in size from one or 
two truck operations to multi-State companies. We have invested 
hundreds of millions of dollars to safely and economically 
manage America's garbage and recyclables. We have created 
thousands of jobs in the process.
    Two years ago, I testified before this committee. I started 
my testimony by saying, today, all over America, trash got 
picked up, so did recyclables, disposal systems met 
environmental regulations, the system works.
    Senators that statement is equally true today. The system 
continues to work. Americans continue to benefit from the most 
environmental protected and cost effective solid waste 
management system in the world. We accomplish this through a 
combination of State and Federal environmental and public 
health protection regulations in a competitive, free market 
system.
    However, if Congress acts to restrict the interstate 
movement of waste, or to re-impose flow control, prices will 
rise with no corresponding public health safety or 
environmental benefits. Attached to my written testimony are 
the results of NSWMA's latest survey of interstate solid waste 
shipments. What did we learn?
    First, 49 States exported some of their solid waste for 
disposal, and 45 States were importers. Second, the amount that 
moved across State lines for disposal in 1995 represents less 
than 10 percent of the solid waste disposed of in subtitle (d) 
facilities.
    Third, the great majority of these shipments occurred 
between neighboring States. This should not be a surprise. 
Markets do not recognize State or county lines. Waste sheds are 
markets. Solid waste moves most efficiently to local markets, 
many of which happen to be located in a neighboring State.
    We also know that solid waste disposal capacity has 
increased dramatically over the last 10 years. In 1986, only 25 
States had more than 10 years of disposal capacity. In 1996, 38 
States had more than 10 years of disposal capacity. As a result 
of new Federal and State environmental protection and health 
regulations, the days of small open burning dumps are over. 
These regulations require careful siting and environmental 
controls such as liners and leachate collection systems. Sites 
will be monitored well after they close.
    Yet meeting these new requirements in a cost-effective 
manner results in a large, highly engineered landfill. 
Development costs of these landfills can easily be $500,000 per 
acre. These costs demand facilities that can achieve economies 
of scale, facilities that will serve a larger geographic area.
    Moreover, these faculties create jobs for local residents 
and the communities receive major financial benefits from host 
community agreements. They use per-ton fees to build schools 
and roads and other public facilities and to lessen the local 
and State tax burden upon their communities.
    Just as we oppose restrictions on interstate transportation 
of solid waste, we also oppose restrictions of the interstate 
transportation of solid waste. Flow control is wrong for all of 
the reasons that interstate restrictions are wrong. The facts 
are clear: flow control establishes expensive, local 
monopolies. EPA's report to Congress made it clear. Flow 
control has no relationship to environmental protection or 
increased levels of recycling.
    So the only issue remaining for flow control proponents is 
the fear that solid waste facility bonds will collapse without 
Congressional action. Yet the reality is that only a very small 
percentage of these facility bonds have been downgraded, and 
those facilities continue to meet their bond payments.
    Flow control proponents claim that taxes have been levied 
to meet bond payments. What really happens is that the hidden 
taxes and inflated tipping fees, which are paid unknowingly by 
residents and businesses, have been replaced with honest, out 
in the open financing. Flow control facilities have lowered 
their tipping fees, eliminated all unneeded expenses, slimmed 
down and become cost-competitive.
    Finally, flow control does not guarantee that enough waste 
will be delivered to a disposal facility. The history of these 
facilities is clear: increased recycling and economic 
recessions cut into the amount of trash available for disposal. 
The bond industry knows this. Well before the Carbone decision, 
bond prospectuses warned that the garbage may not exist in the 
flow control area and that the tip fee would have to be raised 
and guarantee enough revenue.
    Senator I urge you to say ``no'' to monopolies. At this 
historic time when Americans is taking apart electric 
monopolies, don't take a step backwards and create garbage 
monopolies. I urge you to restrict flow control and the 
restrictions on interstate transportation of waste.
    Thank you for the opportunity to present our testimony.
    Senator Baucus. Thank you, Mr. Ciofalo, very much.
    Mr. Olson, you said you favor a presumptive ban. Why is 
that?
    Mr. Olson. Well, it would help States like North Dakota, 
where we've been in the past, I think, fairly well ill-prepared 
for the volume of waste moving into western States like ours. 
And with a presumptive ban, that would help the State health 
department and the State as a whole regulate some of the out-
of-state waste.
    Senator Baucus. Do the residents there know about a 
potential landfill? Do they receive adequate warning or notice? 
Or, on the other hand, did a lot of them wake up one day and 
find, oh, my gosh, there was a big landfill here? I'm just kind 
of curious what that whole process was.
    Mr. Olson. OK, I can be short and to the point. One day I 
opened the local newspaper, and on 3 pages on the inside, there 
was a 1-inch column. It said that there was a large industrial 
waste company bringing waste into a standing facility at 
Sawyer, ND. That's the first anybody knew about it.
    As more of us asked questions and started calling the State 
health department, then more information started coming out 
into the newspaper. But the site was already bought. The site 
was already in the construction phase. And things were going on 
there. It was already in the works. It was a done deal.
    Senator Baucus. There was not an agreement, then, with the 
local community, the town, or was there?
    Mr. Olson. Well, there was an implied consent on the part 
of a local community. But as you know, in North Dakota, you can 
have towns of 100 people, and 500 people surrounding that small 
community. The small community supported the concept, from the 
employment aspect of it.
    Senator Baucus. So you lacked the decisionmaker, or the 
Governor to be able to designate a decisionmaker to be a wider 
area, then, not just the local town, is that correct? I see Mr. 
Seif nodding his head.
    Mr. Seif. The community has to be defined correctly, and it 
has to understand that it's out-of-state waste or in-State 
waste, it has to be an informed consent to be issued by the 
right people.
    Senator Baucus. Mr. Mastro and Mr. Cahill, what's wrong 
with all that? You say you're in favor of exporting only waste 
where there's a host community agreement, if I understood you 
correctly.
    Mr. Mastro. That's correct.
    Senator Baucus. So why not first make sure that there is a 
proper agreement? Isn't it more likely to be a proper agreement 
if there's a presumptive ban until the local community itself 
decides affirmatively that this is what it wants? Because in 
that situation, arguably anyway, they can be more fully 
informed of what's going on, and time to think about this, be 
better able to examine the costs and the benefits of all this.
    Why isn't that better? I say that in part because there are 
host community agreements, and then, as you know, there are 
host community agreements. Some just speak to fees, maybe 
others, and just a whole wide variety. So when you say host 
community agreements, that doesn't really solve the problem. 
The real question is, what should the terms of the host 
community agreements include?
    Assuming that we have host community agreements, and it's 
assumed further that we're talking about fair, legitimate host 
community agreements, whatever that means, and I think most 
people know what that is, why not, what's the difference 
between whether the ban is presumptive or not presumptive? 
Because still, we're going to have the local community agree. 
What difference does it make?
    Mr. Mastro. We are requiring, in connection with the 
exportation of the city's residential waste, host community 
agreements, and we are verifying, and in fact have been 
contacted by governmental entities who have expressed an 
interest from the State of Connecticut, from the State of 
Pennsylvania, other jurisdictions, about exportation of the 
city's residential waste. So we are verifying that there are 
real community host agreements. That's what you need to be a 
qualified bidder in our process.
    However, a presumptive ban is really in our view very bad 
policy. It raises the potential for politicizing a process that 
shouldn't be politicized. Free market forces are working. 
They're working in New York City, which I should add I heard 
the representatives from New Jersey who were here, and the 
mayor from New Jersey who was here talk about their high costs 
of solid waste disposal. They as a State may have the highest 
cost in the Nation, but the city of New York has had the 
highest cost in the Nation. But our ability now for the first 
time to generate competition has caused our prices to go down.
    Senator Baucus. My time is about to expire--just did. One 
very quick question.
    Mr. Seif, what are some of the ranges of terms in host 
community agreements, and what do you think a reasonable set of 
provisions should be? So when we say host community agreements, 
we all know what we're talking about here.
    Mr. Seif. The right synonym for agreement is contract. A 
contract should have consideration--the community gets 
something--and the community needs to be defined, and the State 
should do that. In our case, county would be appropriate.
    We also need to have an understanding on the part of the 
community and its proper authorities, however they are 
constituted, of what's coming, how long will it come. Is there 
a State, proper State regulation and permit, as there would be 
in our case. And all those elements. It's not just one day last 
week, a company got the mayor to agree to a deal and then it 
happens. It has to be a stakeholder type process that can be 
pointed to in the future.
    Senator Baucus. My time has expired.
    Senator Sessions.
    Senator Sessions. Thank you.
    I'm thinking of a little slogan I twisted one time, and it 
was something like this, oh, what a tangled web we create when 
we first start to regulate. Things get more and more 
complicated. I heard the explanation of Connecticut. They 
entered into, they have a lot of different agreements and laws, 
and they want to dispose of waste in any way they want to. If 
they want to pay the price for that, fine. But you can't bind 
the whole world to make it fit into their scheme of things, I 
think.
    Let me just say this, or ask a number of questions. With 
regard to disposal in a State, the commerce clause is an 
important part of our Constitution. It is an essential part of 
the growth and health of the economy of this Nation. Resources 
need to move rapidly between various parts of the Nation and 
back and forth, and I suppose that applies to waste, also.
    However, it seems to me that the courts will allow the 
States or localities to place reasonable controls on interstate 
commerce. Mr. Seif, with regard to that, it wouldn't be wrong 
for Alabama or North Dakota to have reasonable restraints on 
how they will accept garbage, reasonable fees and costs, 
reasonable regulations to monitor, and which you could require 
the landowners to pay all of that, would it? I mean, that is 
not, as your understanding, being eliminated by the Supreme 
Court opinion?
    Mr. Seif. No, the Court goes on to invite the Congress to 
set up such reasonable possibilities.
    Senator Sessions. What about States? Can they do that?
    Mr. Seif. The States should, when the Congress gives us 
permission, accept that invitation to set up only reasonable 
standards, not bans and not silly requirements and not the 
Arizona Mud Flap case and all that. But a right to protect our 
investment.
    Senator Sessions. I guess, you say the Congress, the 
Congress could act. I'm sure there will be some action by this 
Congress. But the State can still protect itself with 
reasonable controls, isn't that right, under the Carbone 
decision?
    Mr. Seif. In the absence of Congressional permission to do 
something more explicit, no State has succeeded, and many have 
tried, including Pennsylvania, to establish various ways to 
control what comes in. All those ways have been struck down in 
other forums, either courts or administrative proceedings. The 
fact is, it doesn't work. We have to discriminate, in no way--
--
    Senator Sessions. Your local trash has to be subject to 
exactly the same conditions of disposal as the out-of-state 
trash?
    Mr. Seif. That's right, and trash is trash, and that's 
appropriate from a technical point of view. The point is, if a 
community spends an enormous amount of money, political capital 
and so on to produce a landfill for itself and 20 years of 
capacity, and then finds out it's only 5 years of capacity 
because we built it and everyone came, then we have been----
    Senator Sessions. Well, but they wouldn't be required to 
take any outside trash, would they?
    Mr. Seif. Well, how can I----
    Senator Sessions. I mean, if you build a landfill for your 
city or county, you wouldn't be required to accept trash from 
another State or city?
    Mr. Seif. When the Secretary denies a permit to trash 
coming from out-of-state, the permit action is overturned in 
courts because I have acted contrary to interstate commerce. I 
cannot ban out-of-state trash.
    Senator Sessions. Well, that's on the assumption that the 
creators of that landfill presumably felt they had the 
authority themselves to do it. But if you created it 
exclusively for your purposes, you wouldn't be required to 
accept any more, would you?
    Mr. Ciofalo. Well, I think you're probably right in that, 
Senator. If we're talking about a municipally-owned landfill, 
and they designate that waste comes in from their municipal 
jurisdiction, I think you're right in that.
    Senator Sessions. What about a private one in which you 
contract with a city?
    Mr. Ciofalo. I think a private one, a private landfill, 
privately owned landfill, I think then indeed the interstate 
commerce clause does enter in.
    Mr. Olson. It may not. In North Dakota right now, Senator, 
there's a case that will be tried that an out-of-state waste 
company wants to dump in the city landfill. The city says, 
look, it's not properly lined. It's not fit to take industrial 
waste from an Air Force Base. We can't accept it. And they're 
going to end up getting it shoved down their throat.
    Senator Sessions. Well, let me pursue that. Let's say a 
private landfill desires to receive, and that's often the case, 
I suppose, you get a permit for a landfill, and they desire to 
receive trash from out-of-state or some other municipality 
within the State. It's hard to stop that under the commerce 
clause as being interpreted now, is that correct?
    Mr. Olson. Yes.
    Senator Sessions. So if you're going to have regulations on 
it, it's got to apply to both the local disposal and your 
interstate disposal?
    Mr. Seif. Absolutely. That's as it should be.
    Senator Sessions. All right. Now, if a city could, if it 
creates its own landfill, it could presumably limit that to its 
own needs. But if it contracts with a private landfill, that 
may be more difficult to do.
    Mr. Seif. Yes.
    Senator Baucus. I have a question for you, Mr. Ciofalo. 
Have waste companies generally been entering into host 
community agreements with importing States?
    Mr. Ciofalo. Yes, Senator. I think that's very typical of 
the industry in general. I know for my company, we have 46 
landfills in 22 States. I can tell you that we have host 
community agreements with all of them. Certainly all of our 
subtitle (d) larger facilities.
    Senator Baucus. The figure I have is that about 19 million 
tons moves across State lines every year. Is that about right?
    Mr. Ciofalo. I think the total universe is about 200 of 
solid waste generating in the United States in 1995, was 280 
million, and of which about 25 million----
    Senator Baucus. Say 25 roughly. How much of that 25 million 
is being imported to a landfill or incinerator where there's a 
host community agreement? What percent, roughly, today?
    Mr. Ciofalo. I don't know a percentage, Senator.
    Senator Baucus. Rough guess?
    Mr. Ciofalo. I think it's very high. I think it would be in 
probably the 80 to 90 percent range.
    Senator Baucus. Next question is, is there capacity, I 
mean, let's say New York, let me get my figures here. As I 
recall, about 13 million tons?
    Mr. Ciofalo. You're talking about Fresh Kills? Thirteen 
thousand tons a day.
    Senator Baucus. And New York State capacity, well, New York 
is now, what capacity is there in New York today?
    Mr. Cahill. Well, Senator, if I could just answer that. Two 
years ago, we undertook a revision to the regulations 
concerning landfill sitings in the State of New York, which 
increased the capacity in New York State by 50 million tons. So 
we have recognized the need for New York State to also look at 
increasing its capacity to address in-State and out-of-state 
waste. Because it should be noted that New York States does 
actually import.
    Senator Baucus. Most States do.
    Mr. Cahill. Yes. Our revisions have, to our regulations, 
has made it easier for siting and has created an additional 50 
million ton capacity.
    Senator Baucus. My real question is the degree to which New 
York waste that's going to be exported can easily be exported 
subject to host community agreements, when I don't know if 80 
percent's correct or not, but let's assume it's correct, it 
sounds a little high to me, frankly. The degree to which New 
York can easily export its balance and add to very 
significantly the amount of waste that is not subject to host 
community agreements. Again, the point being, the question 
being, how easily can New York export all of its waste, and do 
what New York wants to do, that is, subject to host community 
agreements?
    Mr. Mastro. As I said before, Senator, we are going to 
start exporting up to 1,800 tons per day of the residential 
waste in the Borough of the Bronx. We've received six bids 
siting seven different locations, two of them within the State 
of New York. Those bids constituted more than three times the 
capacity needed. In other words, just those bids for that Bronx 
exportation were three times more than the 1,800 tons per day 
that we're seeing to export under that contract.
    I have to add one other thing. There are currently 13,000 
tons per day of waste going to Fresh Kills that we are 
intending to reduce the amount of waste through recycling and 
waste reduction programs. We believe we can have some 
substantial impact on that number over time, through increased 
recycling and waste reduction. But there will still be a need 
for some export.
    Senator Baucus. What about Pennsylvania? How much of the 
volume being exported currently to Pennsylvania is subject to 
host community agreement?
    Mr. Mastro. I don't know the answer of how much is being 
imported to Pennsylvania.
    Mr. Cahill. I think it's important to note----
    Senator Baucus. Could you provide that to us, please?
    Mr. Mastro. Certainly, Senator.
    Mr. Cahill. I think it's also important to note, Senator, 
that in the report that was released by Governor Pataki and 
Mayor Guiliani back in November 1996, with respect to how the 
State and city were going to handle Fresh Kills' closure, it 
would require, all the shipments out-of-state would require 
host community agreements. So I think prospectively the 
answer's been addressed in that report, which I certainly would 
like to provide you.
    Senator Baucus. One question, too, Mr. Cahill, your 
predecessor, when I asked him by what year would New York be 
self-sufficient or contain all of the, deal with internally 
within the State, all of the garbage, the trash that it 
generates, the answer I got was by about December 31, 2001.
    Mr. Cahill. I hope you won't bind me by my predecessor's 
comments.
    Senator Baucus. That was Tom Jorling who made that comment, 
made that statement, made that assertion, said New York could 
handle all of its garbage by the first of 2002.
    Mr. Cahill. Well, I think New York State has made a 
tremendous effort as far as waste reduction and recycling. 
Again, we're leading the Nation in that regard. We have taken 
steps over the last several years to improve siting 
requirements.
    Senator Baucus. Do you have a target date when you will be 
self-sufficient?
    Mr. Cahill. No, there's not a target date. I think we'd 
like to do it as soon as we can. But we realize in the short 
term there's going to be a need for importation of New York 
State----
    Senator Baucus. Was there a change in policy in between you 
and Mr. Jorling?
    Mr. Cahill. No, I think what we've always been trying to 
achieve waste reduction and recycling and how that fits into 
the State's need to export waste. So there hasn't been any 
change in the priorities of the State. I don't know in what 
context Commissioner Jorling made that statement. But frankly, 
it would be unrealistic to think that we would not be exporting 
some waste by the year 2001.
    Senator Baucus. I just generally believe that, first of 
all, very much understand and agree with the interstate 
transport of trash. I mean, that's here, that's fine and it's 
part of the market.
    But I also think that a State has an obligation to take 
care of its own trash as much as possible, even more recycling, 
even more waste reduction. And I understand New York City does 
a good job. But let's be honest about it, that's New York City. 
I mean, it's much easier to recycle New York City, the 
collection process is much easier there than it is in areas 
that are spread way out. Washington, DC has a terrible time 
setting up a meaningful recycling program.
    But I just urge you to take care of your own waste as much 
as possible.
    Mr. Mastro. Certainly, Senator. We'll continue to make 
efforts to increase recycling. But even heavily concentrated 
cities like Philadelphia, Chicago, others don't do anywhere 
near the job that we do in recycling already. We've made a 
substantial financial commitment to increase that recycling.
    Senator Baucus. And 12,000 tons a day is a lot of trash.
    Senator Sessions.
    Senator Sessions. You mentioned six bids. Would you share 
with me the range or percentage differences from your low to 
highest bids?
    Mr. Mastro. Sure. And the six bidders, they ranged anywhere 
from the low 40's up to the high 60's. There have been previous 
estimates that this could cost as much as $75. So all the bids 
came in below that. They ranged geographically, as I said, two 
of the bids were for New York facilities. One was in 
Connecticut, one in New Jersey, one in Pennsylvania and one in 
Virginia. The bidders offered three times the capacity of what 
we will need for that particular project.
    It's because of that free market and that ability to have 
interstate exportation that we were able to substantially 
reduce our costs compared to what we estimated they would be. 
We have been living in the city that has had the highest 
carting costs of any place in the Nation. Our commercial 
carting historically plagued by organized crime cartel control 
of that industry, which we are now breaking and seeing prices 
fall.
    But New York City has had the highest carting costs in the 
country, historically. We're finally seeing that change, thanks 
in part to the ability to have interstate export.
    Senator Sessions. Dr. David Verner, Alabama, Montgomery, 
helped you, I think, break some of that exorbitant cartage 
fees. I respect the work that he did in that regard.
    Well, I think that's good to see that. Because every dollar 
that you spend is a cost applied to the citizens of New York 
and they don't need to pay more than they ought to pay to 
dispose of their garbage.
    I also think, you know, when you think about disposing of 
your own, it would be unrealistic to ask Manhattan to dispose 
of all of its garbage, I think, when there are other places in 
the country that it could be done cheaper and more practically.
    Mr. Chairman, I am delighted to listen to these issues. 
It's new for me to be a part of this committee and to hear the 
complexity and the importance of handling our waste products in 
a way that's at least cost to the taxpayers and most beneficial 
to the environment.
    Thank you very much.
    Senator Baucus. Thank you, Senator Sessions.
    I'd like to tell Mr. Cahill the context of Commissioner 
Jorling's statement. It was at a hearing before this committee, 
it was 1990. And I'm in error. I said that he said that by 
December 31, 2001, I was wrong, he said by the turn of the 
century.
    Mr. Cahill. Are you talking about this century or the next 
one?
    Senator Baucus. I think this one.
    [Laughter.]
    Senator Baucus. Because this hearing was still in this 
century, so turn of this century.
    Well, we thank everybody very much. The record will be kept 
open for 7 days. Thank you.
    [Whereupon, at 1:32 p.m., the committee was adjourned, to 
be reconvened at the call of the chair.]
    [Additional statements submitted for the record follow:]
  Statement of Hon. Dan Coats, U.S. Senator From the State of Indiana
    Mr. Chairman and members of the committee, I appreciate the 
opportunity to testify this morning. I am pleased that this committee, 
once again, has turned its attention to an issue important to Indiana. 
This is a matter that several members of the committee are very 
familiar with. Interstate transportation of waste came to my attention 
early in my Senate career. Ever since that time, I have fought to give 
States and communities the right to impose reasonable restraints on 
out-of-state trash.
    As the Senate and House have struggled since the 101st Congress to 
enact solid waste legislation, shipments across borders have continued. 
Large exporters have continued to ship outrageous amounts of waste 
across State lines. One such State, New York has not opened new home-
State landfills to meet its waste disposal needs. In fact, New York has 
seen an 87 percent decline in landfills since 1986. Now, we read the 
announcement that New York City is planning to close the Nation's 
largest, and New York City's sole landfill, Fresh Kills. It is almost 
certain that no new landfill will be sited within New York City. Over 
13,000 tons of trash per day will be searching for a home. Nearly 5 
million tons annually.
    Large importers, like Indiana, continue to be adversely impacted by 
out-of-state trash. Indiana has been a net importer of waste for over 6 
years. Last year, we received our largest amount of out-of-state 
trash--over 1.8 million tons. But until Congress acts, Indiana's hands 
are tied--Indiana cannot control what comes across its borders and into 
its landfills.
    Congress has come close to enacting laws, but close does not count. 
This year, with the impending closure of Fresh Kills, Congress must 
complete its work and send legislation to the President.
    During the 104th Congress, I supported the Senate bill. Working 
with Senators Chafee, Smith and Baucus, legislation was crafted that 
earned the support of 96 Senators. Later in the congressional session, 
it was approved by unanimous consent. Many came to the table with 
divergent positions, but we were able to work out an agreement. 
Unfortunately, we were unable to secure passage in the House. So here 
we are again--for the fifth straight Congress.
    As the Senate, again, addressees the problem of solid waste, I plan 
to introduce legislation that includes the framework of the consensus, 
Senate bill, but which adds a few provisions that are necessary for 
importing States. (A letter that I received from our State 
environmental commissioner details the need for strengthening 
measures.)
    First, importing States need waste controls on future waste 
shipments--not just existing levels. According to the report of the 
Fresh Kills Task Force (which was charged with exploring New York 
City's solid waste disposal options): ``It is necessary to plan for the 
possible exportation of all residentially generated waste (13,000 tons 
per day) out of the city.'' Besides exportation, New York is also 
exploring the options of recycling and waste prevention, but it is 
unlikely these two options will greatly reduce the amount of waste that 
must be diverted from Fresh Kills. At best, it is unclear how New York 
City will replace this lost capacity. But it is safe to assume that the 
city will export this waste to traditionally large importing States 
such as Indiana, Ohio, Michigan, Pennsylvania and Virginia, and other 
States. These States, already struggling under the weight of out-of-
state waste, need tools to address this additional, incoming waste. 
These tools, specifically needs language and permit caps, would ensure 
that new landfills are not being built primarily for out-of-state 
waste. States need the authority to reserve disposal capacity for their 
own waste.
    Second, the definition of host community agreement must be 
narrowed. In the last Congress, the Senate bill allowed a host 
community agreement to override all actions by a Governor. Since host 
community agreements were broadly defined, a Governor's ability to 
reduce out-of-state waste was limited. To eliminate this problem, we 
need to make sure that all future host community agreements explicitly 
authorize the amount of out-of-state waste to be received at the 
facility.
    Third, importing States should be given the opportunity to freeze, 
and begin to reduce, volumes of out-of-state trash. This allows 
exporting States access to facilities, while guaranteeing the importing 
States can reasonably understand the volumes they will be expected to 
receive. This freeze and reduction will encourage exporters to look for 
home-State capacity. It will also protect the importing States' 
disposal capacity for local and regional waste management needs.
    Finally, others will testify about flow control this morning. I 
have not been directly involved with the details of this issue, but I 
support the two issues being linked. It is clear that if these two 
issues are de-linked, neither will pass. We must address both solid 
waste and flow control, if we are able to pass a bill this Congress.
    Let me stress, as I conclude my remarks, that I am not arguing for 
an outright ban on all waste shipments between States. There are 
examples of effective and efficient cross-border waste management. 
However, we must give States a role in making waste management 
decisions. Without congressional authority, States will remain unable 
to reduce unwanted waste transports. States, communities and residents, 
whose backyards are out-of-state dumping grounds, must have a say in 
the process.
    Again, I commend you, Senator Chafee, and my colleagues on the 
committee, for moving expeditiously on this issue. I look forward to 
working with the committee to ensure that we afford real protection to 
importing States while allowing exporters sufficient time to make their 
own waste management decisions.
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Statement of Hon. Arlen Specter, U.S. Senator From the Commonwealth of 
                              Pennsylvania
    Mr. Chairman and members of the committee, I appreciate the 
opportunity to testify before you today on the critical issue of 
interstate shipments of solid waste, which is a top environmental 
priority for me and for millions of Pennsylvanians. As you are aware, 
Congress came very close to enacting legislation to address this issue 
in 1994, and the Senate passed interstate waste and flow control 
legislation in May, 1995 by an overwhelming 94-6 margin, only to see it 
die in the House of Representatives. I am confident that with the 
strong leadership of my good friends and colleagues, Dan Coats, 
Chairmen Chafee and Smith, and Max Baucus, we can get quick action on a 
strong waste bill and put the necessary pressure on the other body to 
conclude this effort once and for all.
    As you are aware, the Supreme Court has put us in the position of 
having to intervene in the issue of trash shipments. In recent years, 
the Court has struck down State laws restricting the importation of 
solid waste from other jurisdictions under the Interstate Commerce 
clause of the U.S. Constitution. The only solution is for Congress to 
enact legislation conferring such authority on the States, which would 
then be Constitutional.
    It is high time that the largest trash exporting States bite the 
bullet and take substantial steps toward self-sufficiency for waste 
disposal. The legislation passed by the Senate in the 103d and 104th 
Congresses would have provided much-needed relief to Pennsylvania, 
which is by far the largest importer of out-of-state waste in the 
nation. According to the Pennsylvania Department of Environmental 
Protection, which is ably headed by one of your other witnesses today, 
Secretary Jim Seif, 3.9 million tons of out-of-state municipal solid 
waste entered Pennsylvania in 1993, rising to 4.3 million tons in 1994, 
5.2 million in 1995, and a record 6.3 million tons from out-of-state in 
1996. Most of this trash came from New York and New Jersey, with New 
York responsible for 2.8 million tons in 1996 (up from 2.3 million tons 
in 1995) and New Jersey exporting 2.4 million tons to Pennsylvania (up 
from 1.8 million tons in 1995), representing 83 percent of the 
municipal solid waste imported into our State.
    This is not a problem limited to one small comer of my State. 
Millions of tons of trash generated in other States finds its final 
resting place in more than 50 landfills throughout Pennsylvania.
    Now, more than ever, we need legislation which will go a long way 
toward resolving the landfill problems facing Pennsylvania, Indiana, 
and similar waste importing States. I am particularly concerned by the 
developments within the past year in New York, where Governor Pataki 
and Mayor Giuliani announced the impending closure of the City's one 
remaining landfill, Fresh Kills in 2001. I am advised that 13,200 tons 
per day of New York City trash are sent there and that Pennsylvania is 
a likely destination once Fresh Kills begins its shutdown.
    On several occasions, I have met with county officials, 
environmental groups, and other Pennsylvanians to discuss the solid 
waste issue specifically, and it often comes up in the public open 
house town meetings I conduct in all of Pennsylvania's 67 counties. I 
came away from those meetings impressed by the deep concerns expressed 
by the residents of communities which host a landfill rapidly filling 
up with the refuse of millions of New Yorkers and New Jerseyans whose 
States have failed to adequately manage the waste they generate.
    Recognizing the recurrent problem of landfill capacity in 
Pennsylvania, since 1989 I have pushed to resolve the interstate waste 
crisis. I have introduced legislation with my late colleague, Senator 
John Heinz, and then with Dan Coats and cosponsors from both sides of 
the aisle which would have authorized States restrict the disposal of 
out-of-state municipal waste in any landfill or incinerator within its 
jurisdiction. I was pleased when many of the concepts in our 
legislation were incorporated in this committee's reported bills in the 
103d and 104th Congresses and supported both measures strongly during 
floor consideration.
    Some may wonder why there is a need for Federal legislation to 
empower States to restrict cross-border flows of garbage. Simply put, 
Pennsylvania and other States that were in the forefront of solid waste 
management have ended up as the dumping ground for States that have 
been unwilling to enact and enforce realistic long-term waste 
management plans. Although I am advised that these States are making 
some progress, some continue to ship increasing amounts of waste to 
Pennsylvania landfills.
    I urge the committee to report legislation as soon as possible that 
will lead to significant reductions in the amounts of out-of-state 
waste imported into Pennsylvania and other States. I believe that the 
bill in the 104th Congress had the right ingredients: it allowed a 
Governor to unilaterally freeze out-of-state waste at 1993 levels at 
landfills and incinerators that received waste in 1993 and included an 
import State ratchet providing that a Governor could restrict waste 
imported from any one State in excess of 1.4 million tons in 1996, down 
to 550,000 tons in 2002 and thereafter. These provisions would provided 
a concrete incentive for the largest exporting States to get a handle 
on their solid waste management immediately.
    Mr. Chairman, I also want to encourage the committee to include 
provisions addressing the issue of waste flow control authority. During 
the 103d Congress, we encountered a new issue with respect to municipal 
solid waste--the issue of waste flow control authority. On May 16, 
1994, the Supreme Court held (6-3) in Carbone v. Clarkstown that a flow 
control ordinance, which requires all solid waste to be processed at a 
designated waste management facility, violates the Commerce Clause of 
the United States Constitution. In striking down the Clarkstown 
ordinance, the Court stated that the ordinance discriminated against 
interstate commerce by allowing only the favored operator to process 
waste that is within the town's limits.
    As a result of the Court's decision, flow control ordinances in 
Pennsylvania and other States are considered unconstitutional. 
Therefore, it is necessary for Congress to enact legislation providing 
clear authorization for local governments to utilize waste flow 
control.
    I have met with county commissioners who have made clear that this 
issue is vitally important to the local governments in Pennsylvania and 
my office has, over the past 3 years received numerous phone calls and 
letters from individual Pennsylvania counties and municipal solid waste 
authorities that support waste flow control legislation. Since 1988, 
flow control has been the primary tool used by Pennsylvania counties to 
enforce solid waste plans and meet waste reduction/recycling goals or 
mandates and many Pennsylvania jurisdictions have spent a considerable 
amount of public funds on disposal facilities, including upgraded 
sanitary landfills, state-of-the-art resource recovery facilities, and 
co-composting facilities. In the absence of flow control authority, I 
am advised that many of these worthwhile projects could be jeopardized 
and that there has been a fiscal impact on some communities where there 
are debt service obligations related to the issuance of revenue bonds 
for the construction of waste management facilities.
    The committee has, in the past, devised appropriate legislation 
which protected the ability of municipalities to plan effectively for 
the management of their municipal solid waste while also guaranteeing 
that market forces will still provide opportunities for enterprising 
companies in the waste management industry. I urge the committee to 
take the same approach in the 105th Congress and to report flow control 
legislation to the full Senate as soon as possible.
    Thank you again for the opportunity to share my views, and I would 
be glad to answer any questions the committee might have.
                                 ______
                                 
 Statement of Hon. Carl Levin, U.S. Senator from the State of Michigan
    Mr. Chairman, as you know, I strongly support moving legislation to 
give State and local governments the authority to regulate the flow of 
solid waste into and out of their jurisdictions.
    Before June 1, 1992, the State of Michigan's Solid Waste Management 
Act provided that solid waste generated in another county, State, or 
country, did not have to be accepted for disposal unless authorized in 
the receiving county's management plan. This planning process worked 
very well. It provided certainty and assured available disposal 
capacity on a county or regional basis for the long term by authorizing 
limitations on the amount of waste that could be imported. On June 1, 
1992, the Supreme Court, in the Fort Gratiot case, decided that this 
part of the Michigan Act was a violation of the Commerce Clause, in the 
absence of Congressional authorization. This decision has created chaos 
and undermined sound planning.
    Recently, the city of Toronto announced a decision to sign a 5-year 
contract with Browning-Ferris International (BFI) to dump 500,000 tons 
of trash annually at the Arbor Hills, Michigan landfill which BFI 
operates in Salem Township, Washtenaw County. That represents 
approximately 40 or more truckloads per day. This makes a mockery of 
local efforts to plan for local waste disposal needs.
    In 1996, according to the Michigan Department of Environmental 
Quality, Michigan imported waste from 10 States and Canada. Canada 
appears to be the major exporter in terms of volume. It is vital that 
any legislation empower States and affected local governments to 
regulate incoming out-of-country in the same way as out-of-state waste. 
That is why I have coauthored similar provisions in past bills.
    In 1994, 35 States had laws on the books containing provisions 
authorizing some or all of their political subdivisions to exercise 
flow control authority over solid waste within their jurisdictions. 
Clearly, this was a recognition that the waste management facilities 
and programs that local or regional governments had committed to and 
invested in required flow control authority to ensure their continued 
economic viability. The Supreme Court decision, in the Carbone case, 
threw local government flow control plans into chaos. The Supreme Court 
has said Congress can pass legislation to allow local and regional 
governments to act. If we truly believe that State and local 
governments have a rational role in a Federal process, then act we 
must.
    I have been contacted by numerous counties in Michigan that are 
seeking reinstitution of the authority eliminated by the Supreme Court 
decision. Kent County issued approximately $90 million in bonds to pay 
for an integrated waste management facility, and depends on exercising 
its flow control authority to repay those bonds. Emmet County has spent 
millions to develop a transfer station, recycling processing facility 
and a household hazardous waste center. Jackson, Oscoda, Montmorency, 
and many other Michigan counties and cities have similar stories. 
Congress cannot ignore the negative effects that the Carbone decision 
has had on the credit ratings or the viability of investments in waste 
recovery facilities and programs of numerous local governments around 
the country.
    Since the Fort Gratiot decision in 1992, I have supported the 
return of some measure of the original authority over waste to local 
governments and States. I believe these governments have the 
responsibility and the ability to most effectively plan for the 
management of solid waste. The private sector, in this case, is less 
concerned about the long-term environmental and safety risks imposed by 
the disposal of waste than the short-term economic gain they receive in 
obtaining cheap disposal prices. Simple price competition does not 
drive good planning in an area of public activity where feelings run 
high, and understandably so, as is the case in landfill or waste 
disposal facility siting and operation.
    My State should not become a dumping ground dotted with landfills 
spilling over with waste from other States or countries that refused to 
actively and responsibly manage and control the generation of waste 
within their borders. And, that is what appears to be happening. Does 
Canada have less land available for landfills than Michigan?
    Common sense and a decent respect for our Federal system require 
action now on both interstate transportation and flow control of solid 
waste.
                                 ______
                                 
Statement of Hon. Bill Pascrell, Jr., U.S. Representative of New Jersey
    Good morning Mr. Chairman, members of the committee, and the senior 
Senator from New Jersey. Thank you for giving me the opportunity to 
testify on this important issue. I am pleased to be here this morning 
to share my views with the committee on why I am opposed to Federal 
legislation that would allow States to control the flow of solid waste. 
Fundamentally, I believe that flow control is a consumer issue, and in 
this case the consumer is best served by a system of open competition 
which results in lower garbage disposal costs.
    Before I discuss why I am opposed to flow control legislation, I 
believe it is important for me to briefly comment on my background and 
how I came to adamantly oppose flow control legislation. Prior to being 
elected to Congress, I was an Assemblyman in the New Jersey State 
Legislature for 10 years (from 1987 to 1997) and served as the Mayor of 
Paterson for 7 years (from 1990 to 1997). It was during my tenure as 
the Mayor of New Jersey's third largest city where I gained first hand 
experience in paying for flow control. In 1995, the city of Paterson 
spent $11 million of its $137 million budget on waste disposal--roughly 
8 percent of our budget, and we had to send the waste to an incinerator 
in neighboring Essex County. These precious dollars that funded this 
overpriced disposal might have otherwise supported additional fire 
protection, police, education and other important municipal services. 
And the city of Paterson in a lawsuit, Carbone v. Shinn, asserted that 
if it were allowed to pay market costs for disposal it would have saved 
$169,000 to $237,000 per month. Regrettably, due to waste flow control 
New Jersey has the highest disposal costs in the nation--$96 per ton.
    Prompted by these experiences and the U.S. Supreme Court's decision 
in Carbone v. Clarkstown, which held that flow control laws violate the 
U.S. Constitution, I along with a former colleague who is with us 
today, Assemblyman and Mayor of Northvale, John Rooney, became the 
founding members in 1995 of the Mayors' Task Force Against Flow Control 
because New Jersey maintained that its system of flow control was 
different from Carbone. The Task Force included mayors from 7 of the 
States 10 largest cities. We all agreed that flow control costs our 
cities tens of millions of dollars each year, that flow control stifles 
the operation of the free market, and that at the end of the day there 
is no reason that New Jerseyans should not enjoy the benefits of the 
free market in the operation of their solid waste system.
    The simple goal of our task force was to ensure that municipalities 
have the right to send trash to the cheapest waste facility available. 
Mr. Chairman the imposition of solid waste flow control is a flawed 
policy that benefits neither the consumer, the taxpayer, nor the 
general economy. The only beneficiaries are local government officials 
and county utility authorities. And flow control is not necessary to 
enable governments to obtain bonds needed to build waste facilities. 
With flow control assurances, underwriters are willing to issue bonds 
for facilities that could prove wasteful and incapable of competing in 
an open market place. If underwriters do not want to support 
construction of a facility, that's a good thing. It protects taxpayers 
and consumers from subsidizing what would be a poor investment decision 
by the local government in the first place. Last, groups like the New 
Jersey Environmental Federation and the Sierra Club are also opposed to 
flow control--adding yet another voice to the already long list of 
those in opposition to flow control legislation.
    The fact of the matter is that flow control legislation is simply 
bad policy. Mr. Chairman, I am strongly opposed to Federal flow control 
legislation. Local governments, small businesses, and households are 
better off without it. We should let the free market determine the 
lowest price, to the benefit of all involved. To borrow a quote from my 
former colleague, Brett Schundler, ``Instead of passing flow-control 
legislation, Congress should bury it in the trash heap of discarded 
ideas.''
    Thank you for this opportunity to share my views with you.
                                 ______
                                 
    Statement of Hon. Bob Franks, U.S. Representative of New Jersey
    Mr. Chairman, and members of the committee, thank you for giving me 
the opportunity to testify in support of Federal action required to 
avert a crisis in my home State of New Jersey.
    At issue today is a court ruling that, if left unanswered, could 
jeopardize the solvency of more than $ 1.7 billion in bonds issued by 
New Jersey counties to construct waste disposal facilities.
    Without Congressional intervention, the burden of repaying this 
debt will fall on innocent taxpayers. Through no fault of their own, 
taxpayers could face huge increases in their local property tax bills.
    Mr. Chairman, I am not here to argue the pros and cons of flow 
control. Rather, my objective is to ensure that taxpayers of New Jersey 
are not penalized because the courts have invalidated a long-standing 
State policy.
    Let me briefly describe how New Jersey finds itself in this 
untenable situation.
    Two decades ago, the State faced a solid waste crisis. With most of 
the State's landfills having reached capacity or forced to close due to 
the tougher environmental regulations imposed by the Resource 
Conservation and Recovery Act, New Jersey was forced to rely heavily on 
out-of-state disposal facilities. At one point, New Jersey was shipping 
nearly 55 percent of its trash to other States, and the costs of 
disposal were mushrooming.
    In response, the State Legislature passed the 1978 Solid Waste 
Management Act, which required each of our 21 counties to develop plans 
to dispose of their trash within the State. Counties issued over $1.7 
billion in bonds to finance the construction of incinerators, transfer 
stations, or landfills to comply with the State mandate. In my district 
alone, the County of Union' issued more than $300 million in bonds to 
finance the construction of a waste-to-energy incinerator.
    The financial scheme under which this and dozens of other 
facilities were constructed was based on the State's ability to direct 
all the trash generated in a specific geographic area to a particular 
disposal facility. The authority to direct the disposal of trash was 
essential to ensure that county utility authorities would have a 
guaranteed, steady flow of trash required to pay for the construction 
of the disposal facilities. Therefore, ever since the late 1970's, flow 
control authority has been an integral component of New Jersey's solid 
waste management system.
    The 1994 Carbone vs. Clarkstown decision and the subsequent 
Atlantic Coast decision have thrown New Jersey's solid waste disposal 
program into turmoil. The Carbone decision declared the practice of 
flow control to be unconstitutional. The Atlantic Coast decision upheld 
the Carbone ruling and gave our State 2 years after the last appeal to 
end its practice of directing waste flow.
    I recognize that allowing the free market to dictate solid waste 
decisions is ultimately in the best interests of all consumers and 
taxpayers. New Jersey, however, needs time to responsibly make the 
transition in a manner that will allow us to meet our existing $1.7 
billion financial obligation.
    In light of the recent Federal court decisions, the ability of New 
Jersey's counties to reimburse bondholders for the construction of 
waste facilities, as well as the ability to honor contracts with 
incinerator operators, are in serious jeopardy.
    The court decisions are already having an effect on the financial 
stability of utility authorities. Last September, ``Standard and 
Poors'' lowered its rating on $416 million of solid waste system 
revenue bonds issued by two agencies, the Union County Utilities 
Authority and the Pollution Control Financing Authority of Camden 
County, from single `A' minus to double `B'.
    Mercer County announced last year that it is stopping construction 
of its trash incinerator--after investing $100 million in the project. 
The county decided it was too risky to proceed with the project because 
of the uncertainty over flow control.
    And some counties are already considering property tax increases to 
pay for the debt incurred from carrying out this State mandate to 
manage their own waste.
    Mr. Chairman, long before the Carbone decision, the State of New 
Jersey had made an enormous investment in its comprehensive solid waste 
management system. Taxpayers should not be stuck with the tab because 
the rules have been changed in the middle of the game.
    Governor Whitman, the New Jersey Assembly and all 21 of New 
Jersey's counties are asking for an extension of flow control authority 
until all the debt obligations incurred by the counties to construct 
disposal facilities have been paid off During the last Congress, we 
tried to pass legislation to grant this temporary reprieve. The Senate 
passed S. 534. As you know, however, its companion bill, H. Res. 349, 
failed to pass the House. It failed because of the ongoing dispute over 
provisions affecting the interstate transport of solid waste.
    This year, I have sponsored legislation in the House to grandfather 
flow control programs existing before the Carbone decision. Two weeks 
ago, I introduced legislation that contained the same language as S. 
534 and H. Res. 349 on interstate waste and flow control. H.R. 942 
contains the Senate's interstate waste language and the flow control 
language of last year's House bill. The other measure, H.R. 943, 
contains the House's flow control language as a stand-alone bill, with 
a modification to include construction and demolition debris. I would 
like to submit these proposals for the committee's consideration.
    I want the committee to know that there is strong support for 
grandfathering flow control authority for those States that had it in 
place prior to the Carbone decision. In the 104th Congress, the entire 
bipartisan New Jersey Congressional delegation supported H. Res. 349 
and other efforts to grant a temporary reprieve from the effects of the 
courts' decisions.
    In addition, the States of New Jersey, New York, Pennsylvania, 
Ohio, Indiana, and Michigan have all agreed on flow control 
legislation.
    I urge the committee to pass legislation to grant flow control 
authority to States like New Jersey, so that they can repay outstanding 
debts owed to investors, and move on to a competitive system.
    Thank you for this opportunity to testify. I will be happy to 
answer any questions that you have.
                                 ______
                                 
           Statement of John E. Rooney, Mayor, Northvale, NJ
    Good morning Mr. Chairman, members of the committee. Thank you for 
the opportunity to address this committee on the issue of flow control. 
I am opposed to any Federal legislation that allows States to control 
the flow of solid waste thereby squelching competition and raising the 
cost of garbage disposal.
    I will explain the reasons that this body does not need to enact 
flow control legislation. First, I would like to let you know who I am 
and why I so fervently oppose flow control.
    I am the Mayor of Northvale, New Jersey. Northvale is a suburban 
community nestled in the far northeastern corner of New Jersey. I have 
been Mayor there for 15 of the last 20 years. I am also a member of the 
New Jersey General Assembly. I have been honored to serve my district 
for the past 14 years. From 1983 to 1988 I served as a commissioner of 
the Bergen County Utilities Authority, the agency in my county 
responsible for the oversight and now participation in the solid waste 
industry.
    I also come here today with yet another hat, that is, Chairman of 
the Mayors' Task Force Against Flow Control. The Mayors' Task Force was 
formed shortly after the U.S. Supreme Court's decision in Carbone v. 
Clarkstown. As this committee well knows, the Court in Carbone, resting 
``upon well-settled principles of our Commerce Clause jurisprudence'' 
held that flow control laws violate the U.S. Constitution, which 
prohibits individual States from hoarding an article of commerce--in 
this case, garbage--to the exclusion of other States.
    Mayors like myself saw this decision as a rare opportunity for 
lower property taxes. Garbage disposal ranks near the top of most 
municipalities' budget items. This is true in New Jersey where as a 
result of waste flow control we have the highest disposal costs in the 
nation--$96.00 per ton. If I may, I would like to share an anecdote 
which illustrates just how perverse an effect waste flow control has 
had in New Jersey.
    In February 1988 at the beginning of the waste flow control era, I 
was having some construction done on my house that resulted in a 
considerable amount of debris requiring a 10 yard dumpster. The hauler 
informed me that if he took the container by Friday my cost would be 
$350.00; however if I waited until Monday, after flow control took 
effect, my cost would be $1,300.00.
    No longer were municipalities or businesses permitted to choose the 
disposal facility that made the most economic sense for them. Everyone 
had to deliver their waste to the ``favored'' government facility. 
Ironically, the facility in my county simply shipped the waste to a 
landfill which the rest of us were prohibited from doing business with. 
Remember flow control is not about preventing some environment insult, 
rather it is about economics (I refer you to portions of the executive 
summary of a March 1995 EPA report on Flow Control which is submitted 
with my testimony).
    After Carbone, communities throughout New Jersey thought rate 
relief was in sight. However, the State persisted in its stance that 
New Jersey's system of waste flow control was distinguishable from 
Carbone. I, along with three other Mayors joined a Federal Lawsuit to 
end waste flow in New Jersey. The Judge told us we had no legal 
standing to remain in the suit. We had no where to turn. We were 
compelled to form a coalition, the Mayors' Task Force, to convey to the 
State and Federal Government the position of communities; the view from 
the front line; the view from the pocket book.
    The Mayors' Task Force started as a few concerned Mayors. Although 
we were not given much of a chance to mount an effective grassroots 
campaign by many of the so-called experts. We have come a long way. Our 
ranks number nearly 250 Mayors from across the State representing 3.5 
million of our residents. We are democrats and republican alike. While 
we include Mayors from 7 of the largest 10 cities in the State, we also 
include Pine Valley Borough, population 19.
    We have also been joined by others who are concerned, including The 
New Jersey Environmental Federation, an umbrella organization of 
several environmental groups. Other groups supporting our cause include 
Hands Across New Jersey; Common Cause; New Jersey Business and Industry 
Association; the Chemical Industry Council; United Tax Payers of New 
Jersey; the New Jersey Chamber of Commerce; and the New Jersey League 
of Municipalities.
    These groups and the Mayors' Task Force all see waste flow control 
for what it really is--a garbage tax that feeds the bureaucratic 
monoliths called county utility authorities. These utility authorities 
maintain a stranglehold over towns like mine by forcing us to use their 
product and only their product. This government intervention where it 
does not belong simply adds another layer to an already bloated 
bureaucracy.
    Today is a time where politicians talk of reducing bureaucracy and 
balancing budgets. Federal legislation to permit flow control puts us 
on a diametrically opposite path. Flow control allows the government to 
grow by allowing county utility authorities to charge artificially high 
tipping fees, in Bergen County $103 per ton (the national average is 
$34 per ton). This tipping fee plays havoc with my budget forcing me to 
divert badly needed funds for infrastructure, police and public safety 
to garbage disposal.
    Let's analyze Bergen County's rate of $103 per ton. Bergen was 
mandated to send 192,000 tons of waste to the Union County Incinerator 
at $80.00 per ton. Bergen pays $24.00 per ton to ``process'' its 
garbage at the Bergen County transfer station and $12.00 to ship it to 
Union--$116.00 per ton. The balance of Bergen's waste which was bid in 
the free market obtained a price of 42.75 for transportation and 
disposal.
    Recently I sought a non flow control alternative for Northvale's 
disposal. I was immediately threatened by the State with fines of up to 
$50,000 per day for daring to violate this unconstitutional law. I was 
thus prevented from implementing a bid of $63.00 per ton, nearly a 40 
percent savings with a stroke of the pen. How would this body like to 
find a budgetary item that could be cut 40 percent immediately without 
cutting services.
    Suffice it to say you would all have great job security. Now, think 
if you had the 40 percent savings at your fingertips and someone took 
it away. If you pass flow control legislation, that's what you will do 
to my community and 566 others in New Jersey alone.
    It's been nearly 3 years since flow control was declared 
unconstitutional and no bonds have defaulted. Rather, the facilities 
are learning to compete. New York City recently received bids for 
disposal at a cost of $43.00 per ton from a facility located in Newark, 
New Jersey, while Newark itself is forced to pay the same facility 
$72.00 because of flow control.
    There has been no case made that county facilities have to be 
bailed out by the taxpayer. And make no mistake, that is what flow 
control legislation would be doing. They may not call it a tax; they 
may tell you that no money needs be spent by passing this legislation; 
they may even tell you that the sky will fall without this legislation. 
But you will be bailing out yet another government flop.
    Look at the evidence. To whom does the artificially high tipping 
fees flow to in the long run, not the hauler, not even the business--
no, its the same people who always pay it--the taxpayer.
    The Mayors' Task Force advocates the following. Communities, and 
businesses, must be allowed to contract with the most cost effective 
yet environmentally sound vendors of their choosing. We must be free of 
the government restraints which Federal flow control legislation will 
perpetuate.
    New Jersey presently has several bills in the legislature dealing 
with a post flow control world. While differing in approach the bills 
in the New Jersey Assembly recognize that the financial integrity of 
existing solid waste facilities need some degree of protection, however 
if Federal legislation is enacted and the present system of flow 
control is allowed to remain intact it will continue to have the same 
deleterious effect on the taxpayers. The approach I advocate is one 
where we put in place a mechanism to pay off existing debt but 
simultaneously force the county facilities to compete. In other words, 
I want to cut our losses.
    Mr. Chairman, members of the committee, this issue is about nothing 
more than political turf. It pits the county and State governments 
against the municipal government. It allows the voracious appetite for 
hidden tax dollars to be spent by groups of bureaucrats, who are 
typically appointed rather than elected. I like my fellow Mayors must 
stand in front of my constituents, and explain why services at the 
community level are being cut, while at the county level, the 
bureaucracy keeps expanding.
    Article I, section 8 of the Constitution, the Commerce Clause, is 
there precisely for the reasons we find ourselves here today. The power 
to impede the flow of interstate commerce among the States lies with 
the Congress. This body must see through the smoke and mirrors, and not 
allow the balkanization of this nation because of a battle over turf.
    On May 16, 1994 the United States Supreme Court removed the noose 
from our necks, I respectfully and sincerely ask that you do not 
replace it.
    The roots and benefits of interstate commerce are embodied in the 
words and teaching of the United States Constitution. At the founding 
of this nation we were cautioned about erecting economic barriers 
between the States. A healthy respect for the wisdom of our nations' 
founders warrants that we are cautioned now.
    Thank you for this opportunity to present my views in opposition to 
Federal flow control legislation.

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 Response by Mayor J.E. Rooney to Additional Question Asked by Senator 
                                 Chafee
    Question. I understand that New Jersey's Bergen County incurred 
$100 million in solid waste debt but built only one transfer station, 
but no landfills or incinerators. Was the balance of that $100 million 
spent wisely, and if not, who should now bear the costs of dealing with 
poor investments? Should all of New Jersey's citizens bear it equally, 
or just those in affected jurisdictions?
    Response. Bergen County built a facility to process 5,000 tons per 
day of solid wastes when they knew their maximum available waste--based 
on their planned, but never built incinerator's ``put or pay'' 
provisions--was 2,000 tons per day. They also have 4 private facilities 
approved under the current Solid Waste Management Act, and several 
others that are not approved, handling the county's total garbage. The 
actual current tonnage at this ``Taj Mahal'' transfer station is less 
than 1,000 tons per day.
    If ``Flow Control'' ended today, the cost of garbage would drop 
from $103.38 to between $40 and $50 per ton in Bergen County. Our 70 
municipalities could pay their $121 Million in debt through a 10 year 
bond issue at a approximately $20 per ton tax or ``user fee'' on their 
garbage and still save their taxpayers 3-4 tax points or $45-60 per 
household.
    If a statewide solution were approved, it would have the same 
monetary effect of $20 per ton for the State's ``true'' bonded 
indebtedness of $1.2 Billion. This approach has not been acceptable to 
those counties with little or no debt. Conversely, the county-wide 
approach is not acceptable to those counties with incinerators because 
their costs might exceed $50 per ton. The correct solution is probably 
a hybrid of both with a State subsidy for the 4 incinerator counties 
and a county by bounty solution for the rest of the State.
    There are currently 8 different bills in our legislature dealing 
with all aspects of this issue. We are nearing a consensus and the only 
thing holding up a final decision is the timing of when the stay will 
be lifted.
    As I stated at your hearing, we are near a solution, ``Please, 
don't help us!''
                                 ______
                                 
Additional Information Supplied by Mayor J.E. Rooney to Questions from 
                           Senator Lautenberg
    In the event the stay is lifted, most certainly, I and my fellow 
mayors will send our garbage to the lowest cost facility. However, at 
the present time in Bergen County, that facility is the Bergen County 
Utility Authority.
    The State mandated Bergen to deliver 192,000 tons per year to Union 
County at $80 per ton. Bergen also has a contract with Chambers 
Environmental for landfill disposal for the balance of their waste, bid 
and negotiated in the ``free market'' at $42.75 per ton. When the Union 
County contract is eliminated, most Mayors would be happy to work with 
Bergen County to pay off this debt by adding another $20 per ton (for 
10 years) to the Chambers contract, thereby, saving their taxpayers 3-4 
tax points or $45 to 60 per household.
                                 ______
                                 
    Senator Coats and Senator Levin talk about restricting interstate 
garbage but, apparently without a coalition of those legislators who 
want flow control, there is neither flow control nor an interstate ban. 
Over 240 New Jersey Mayors have signed petitions against flow control. 
Four our delegation to support the interstate ban would be a sellout of 
New Jersey's interests. After all, New Jersey's landfill's are full 
because, for years we ware the dumping ground for New York City and 
Philadelphia.
    Additionally, the only interstate band discussed so far has been a 
voluntary one. The only effect this would have would be limiting to the 
available supply of landfill space, thereby driving up the national 
cost of disposal forcing thousands of mayors across the country to 
experience what we in New Jersey have found--that political 
interference always results in higher taxes.
    On the theoretical chance that we would be forced to stay in New 
Jersey, without flow control, we would at least be assured that 
competitive alternatives would be available, instead of the State- 
mandated fiascoes that we have witnessed over the last 20 years.
    As I have stated in almost very debate and forum on this issue, 
``Any politician in favor of flow control, is in favor of higher 
property taxes''.
                                 ______
                                 
   Statement of Randy Johnson, Chair, Board of County Commissioners, 
                       Hennepin County, Minnesota
    I am Randy Johnson, Chair of the Board of Commissioners of Hennepin 
County, Minnesota, and President-elect of the National Association of 
Counties. NACo represents the over-3000 counties in the United States.
    We appreciate being invited to participate in this hearing, 
although once again we find that the panel is skewed toward witnesses 
that are apparently opposed to local governments making decisions about 
local issues and repaying of the real issues surrounding flow control, 
rather than some oft-repeated slogans like ``government monopoly versus 
free markets'', leads clearly to the conclusion that our position is 
sounder public policy and minimizes the Federal government role in 
local government.
    Counties are involved with solid waste flow control for two primary 
reasons. First, trash disposal has been a traditional, fundamental 
public health and safety function of local governments in this country 
for more than two centuries--even before the Constitution was adopted. 
Citizens demand and expect that safe disposal of garbage will be 
assured by their local government. When garbage piles up on the streets 
because of collection problems or landfills leak into water supplies, 
it is the local governments that take most of the heat.
    Secondly, most States mandate that we handle garbage and trash. 
States mandated recycling quotas, mandated long-range planning 
requirements, mandated items that must be excluded from landfills and 
incineration, and mandated consumer education programs. In short, we 
must deal with trash by State law.
    While we are not here today to complain about State mandates, it is 
important for you to understand that in nearly every case, we didn't 
ask our State legislatures for these mandates. We did ask for the 
financial tools to carry out those mandates. Flow control was one of 
those tools.
    When these mandates were imposed, not every county chose to adopt 
flow control as a tool for financing their waste management system. In 
fact, less than 20% of the municipal garbage and trash stream in the 
United States is--or ever has been--subject to any type of flow 
control. Any argument that flow control grossly interferes with the 
profits of business or has an impact on the economy, is simply not 
supported by the facts.
    Those counties and cities that were given flow control authority--
like my county--and those counties that were mandated by State law to 
exercise that authority--like counties in New Jersey--undertook a 
series of programs to carry out our responsibilities to manage the 
garbage generated within our own borders. We tried to solve local 
problems at the local level.
    There is one other point that I want to make at this time. 
Municipalities that object to flow control requirements exercised by 
their counties over garbage generated by cities and towns should take 
their concerns to their own State legislatures, not to the Congress of 
the United States. It is the State government, not the Federal 
government, that divides up the responsibilities between cities and 
counties in each State. This Congress should not be interfering in 
State disputes among local units of government.
    A great deal of investment in public infrastructure has taken place 
in the local governments that used flow control as a method to finance 
facilities. Since 1980, over $20 billion in State and local bond issues 
were sold for solid waste facilities. Unless legislation is promptly 
enacted by this Congress, many communities face severe financial 
consequences. Attached to my testimony is a list of just some of the 
problems that we are learning about from around the country. The list 
gets longer every day that Congress postpones action.
    Here are some of the impacts. The national credit-rating agencies 
downgraded debt ratings for 17 local and State solid waste authorities 
since the Supreme Court threw out a New York flow control ordinance 
three years ago. Moody's downgraded 15 issues, of which approximately 
half were downgraded to ``junk bond'' status. Standard and Poor's 
downgraded 4 issues, 2 of which were classified as ``junk bonds''. 
Fitch downgraded 3 issues to ``junk bond'' status.
    In addition to the downgrades, Moody's has 8 additional bond issues 
under credit review. As litigation increases and the cases work their 
way through the courts, more downgrades are likely.
    The total outstanding debt that has either been downgraded or put 
on a credit watch for potential downgrading by the rating agencies 
since the Carbone case is over $3.3 billion by local public agencies.
    What does this mean? It means that the next time these governments 
try to go to the bond market to borrow funds for other public 
projects--like jails or bridges or schools--they may be unable to find 
any market for the bonds. For those that are able to find buyers of 
their debt, the interest rate will be significantly higher, by as much 
as 10-20 percent for mandated governmental programs. This additional 
cost will be borne by local taxpayers--businesses as well as residents.
    But it is not only downgrades that we are concerned about. We are 
seeing other detrimental and expensive effects from the Congress' lack 
of action on flow control legislation. In my county, we have been sued 
by four businesses and some individuals in a class action suit 
regarding our flow control ordinance. A year ago the Federal court 
certified a class consisting of all Hennepin County commercial and 
residential waste generators--that is virtually every person in the 
County! The court already found that the ordinance violated the 
Commerce Clause based on the Carbone decision, and permanently enjoined 
its enforcement.
    Now we will begin trying the second phase of the case--the exact 
amount of the alleged damages. Plaintiffs are claiming $154 million--
nearly one-half of Hennepin County's total annual property tax levy. To 
add insult to injury, if the court allows this case to proceed to final 
judgment because Congress has not acted, Hennepin County taxpayers will 
also have to pay millions of dollars in plaintiffs' attorneys' fees! 
Other lawsuits have been filed and more are threatened.
    In other counties, similarly difficult impacts are occurring. In 
Dade County, Florida, 280 employees were fired, water and sewer rates 
were raised by 12%, recycling programs were cut, enforcement of illegal 
dumping was reduced, and other environmental programs were cut back.
    Other counties in Florida, Maryland, New York, North Carolina, 
Iowa, and Virginia have had to increase local taxes and/or fire 
employees. Cuts in recycling programs, or new fees to pay for recycling 
are occurring all over. The progress that we have made in recycling and 
waste reduction over the last decade in these communities is being 
lost.
    Another important trend that we see happening from the loss of flow 
control is that waste haulers are paying less to dump trash and local 
taxpayers are picking up the tab. In fact, we have evidence to show 
that although the disposal cost to waste haulers is going down, they 
are not necessarily passing these savings on to their customers. In 
Falmouth, Maine, for example, the city raised its residential rates by 
50 percent and reduced its commercial disposal rates for businesses. 
Did the businesses see those savings? On the contrary--the private 
haulers just pocketed the savings. So the businesses and residents of 
some communities are paying twice--once to the waste hauler for the 
same service at the same price and again to the county in higher taxes 
or fees to pay for the disposal facilities.
    The debate over flow control has never been a disagreement between 
the public sector and the private sector. Local governments acted in 
good faith, under the laws that our States adopted. We built, or in 
most cases, entered into to competitively-bid public-private 
partnerships to build facilities that are now being undercut by 
temporarily cheap landfills and temporarily cheap landfill prices. We 
are simply trying to cover the public investment in the facilities that 
we were mandated to build.
    Similar to the electric utility restructuring debate, we are 
seeking a way to cover our ``stranded investments'' in these 
facilities. It is only equity that we are asking for, nothing more.
    We hope that this committee sees the value in supporting 
legislation that will allow us to continue to pay off our bonds and 
manage our systems that way the our citizens want us to manage them. We 
urge you not to tie our hands and make us have to explain to taxpayers 
why Congress is forcing us to increase local taxes.
    Thank you.
                                 ______
                                 
                               ATTACHMENT
          Think the Lack of Flow Control Hasn't Hurt Anybody?
                              think again
    Without Flow Control, Public Officials Around the Country Face 
Severe Problems
     Dade County, Florida lowered disposal fees by more than 
20%, fired 280 employees, renegotiated contracts, restructured debt, 
sharply reduced capital expenditures, increased taxpayers' surcharge 
12% on water and sewer bills, as well as increasing the cost of carting 
services, cut recycling efforts, delayed development of two household 
chemical collection facilities, downsized the illegal dumping task 
force, and cut the county's mulching program. Despite Dade County's 
significant reduction in tip fees, cost savings, and revenue 
enhancements, the County's bond rating was lowered by the national 
rating companies.
     Virginia's Southeastern Public Service Authority (SPSA) 
lost more than 50% of its general cash balance, fired 50 employees, 
increased the user fee for disposal and instituted a new fee for 
recycling. SPSA's bonds were downgraded bonds due to lack of flow 
control.
     Hennepin County, Minnesota faces more than $150 million in 
court-imposed judgments stemming from a class-action lawsuit by waste 
haulers challenging the County's flow control authority. Taxes could 
more than double to cover the County's liability.
     Atlantic County and surrounding counties in New Jersey 
lost more than $2 million dollars in revenues. Staff was cut by eight 
percent. Development of a recycling center stopped. Bonds used to 
finance solid waste facilities and services have been downgraded in 
Union County, and Camden County to non-investment (``junk bond'') 
status.
     The City of Falmouth, Maine has been compelled to raise 
its residential rates by more than 50% while reducing commercial 
disposal rates in order to entice haulers of commercial waste to use 
the town's facility. Almost $3 million per year in disposal fees have 
been shifted from commercial haulers to residential taxpayers, yet 
businesses have seen no reduction in their waste hauling fees because 
private haulers are pocketing the savings.
     Iredell County, North Carolina, has lost nearly $300,000 
in cash revenues.
     Charles County, Maryland lost 40% of its facility 
revenues, fired employees and cut recycling efforts. It faces the 
potential of having to subsidize its landfill with tax revenues.
     Lee County, Iowa relied upon flow control to organize a 4-
county interstate solid waste authority to share the debt of $8.9 
million for a disposal site. Three of the counties have now abandoned 
the authority, leaving the stranded debt to be paid by a population of 
40,000 people. To repay the bonds the county has been forced to impose 
a waste management fee, the burden of which falls mainly on small 
businesses which pay an average of $240 year.
     Skagit County, Washington was forced to close its revenue 
producing waste-to-energy plant, leaving the County with a bonded 
indebtedness of $12 million for which they have no revenue source other 
than local taxes.
     Since the Carbone decision in mid-1994, the Waste System 
Authority of Eastern Montgomery County, Pennsylvania has been forced to 
shift the cost of waste disposal from the commercial ratepayers to 
residential taxpayers to cover the costs of the bond payments. 
Municipalities will see their rates increased by $1,170,000 in 1997 to 
replace $3.8 million in lost disposal fees from waste haulers. If 
commercial waste continues to leave the area for cheap landfills, 
municipalities will have to cover the revenue shortfall of $5.5 
million, or approximately $129/ton.
     The loss of flow control in Savannah, Georgia costs city 
taxpayers over $1.3 million every year and increases the amount of 
garbage taking up valuable landfill space instead of being converted 
into energy. The city estimates that every day's delay of passage of 
Federal flow control legislation is costing each Savannah taxpayer 
$3,561.
     New Hanover County, North Carolina stopped development of 
a recycling facility and raised taxes while transferring nearly $10.5 
million from general funds to cover the more than $18 million in lost 
revenues.
     Warren and Washington Counties, NY face up to a $2 million 
shortfall in revenues from the district's waste-to-energy plant as a 
result of reduced tipping fees, adopted to compete with cheap 
landfills. To raise enough money to meet debt service payments on the 
plant, the counties plan to raise taxes, however such an increase will 
violate State tax caps and subject the counties to a legal challenge 
from the local taxpayers association.
     Lee County, Florida increased property taxes on an 
emergency basis to cover $7.8 million in lost revenues, representing 
30% of its solid waste department's operating budget. Property owners 
face a special assessment over the longer-term.
     Eau Claire County, Wisconsin has lost 80 percent of the 
tonnage at their solid waste facility that was used to guarantee the 
bonds to finance the facility. This loss will cost the county, whose 
population is only 85,000, roughly $1 million per year over the next 
six years in taxes to pay off the debt used to finance the facility.
     The Town of Babylon, New York lost $2 million in 1995 
alone--6% of its total town budget. The town was forced to lay off 70 
employees. Babylon created a commercial garbage district to offset 
losses, and was sued by haulers. The lawsuit cost the town nearly $5 
million in lost revenues and legal expenses.
     Whatcom County, Washington was ordered by a Federal 
arbitrator to pay $75,000 in damages to a local hauler who refused to 
meet the county's recycling performance targets under the flow control 
ordinance. As a result, the County has ceased providing incentives to 
private haulers for recycling.
     The bond rating of the solid waste authority of St. 
Lawrence County, New York was lowered as the authority faces a $1 
million short-fall this year. The County will need to borrow up to $3 
million to subsidize the authority.
     The Metro Waste Authority of Des Moines, Iowa has lost 
nearly $1 million in waste stream revenue to nearby landfills that have 
cheaper rates, resulting in a downsizing of the Authority by 35%.
     Calvert County, Maryland cut recycling efforts and 
employee hours by 30% to avoid layoffs due to lost revenues.
     Citrus County, Florida delayed capital expenditures as it 
faces loosing up to 60% of its waste stream to out-of-county landfills.
     A radical drop in the usage of the county-operated 
landfills, and resulting funding shortage, forced Prince George's 
County, Maryland to impose new fees for recycling on county taxpayers. 
The backlash from the new fees helped pass a taxpayer-let ballot 
initiative that requires any new county fees to be approved by 
referendum.
     St. Lucie County, Florida lost 30% of its landfill 
revenues and fired eleven employees.
     The bond ratings of the waste-to-energy facility of Mercer 
County, New Jersey were downgraded to a B rating (a ``junk'' bond 
rating) after Federal courts declared the State's flow control law to 
be unconstitutional. The county Board of Freeholders was forced to 
cancel the $200 million facility, leaving county taxpayers with the 
dilemma of how to pay off the bonds.
     Dutchess County, New York taxpayers paid $5 million more 
in property taxes in the last year-and-a-half in addition to their 
garbage bills due to the loss of waste volume.
     Seven metropolitan Minnesota counties have seen an 
increased reliance on out-of-state landfills. After a decade of 
progress in managing waste within their own region and diverting waste 
from landfills by use of recycling and resource recovery facilities, 
from a 1993 landfilling rate of 11%, the counties report that 
landfilling has reversed direction and is now over 18%.
     Oneida and Herkimer Counties in New York face a lawsuit 
threatening to scuttle the counties' integrated waste management system 
and force property taxpayers to pay off $47 million in bonds.
     Nassau County, Florida lost 20% of its facility revenues.
     Montgomery, Otsego, and Schoharie Counties in New York 
stopped recycling collection services and face dismantling the entire 
solid waste management system. The bond insurer for the counties' 
facilities stated that future actions ``could totally destroy the 
established belief in the municipal bond market.''
     Huron County, Ohio has lost one-third of the tonnage 
previous delivered to its facility.
     Prince William County, Virginia is losing $1.8 million 
annually in revenues. To make up for the loss, citizens are now 
required to pay higher fees for special services. Programs to reclaim 
old landfill space for recreation areas, promote recycling, and expand 
recycling programs have been reduced or eliminated.
     Wright County, Minnesota has closed an innovative high-
tech composting facility, financed with taxpayer-funded bonds. Twenty-
five employees have lost their jobs and the cost of paying off the 
bonds will be born by a special yearly assessment on all property 
owners.
     Warren County, New Jersey issued debt to build a waste 
facility, entering into an agreement with Huntington and Somerset 
Counties to supply waste to the facilities. If these counties cannot 
exercise flow control, the burden of the debt service will fall 
entirely on Warren County residents, increasing their total 
indebtedness by 400%. The added costs would force a 30% increase in the 
county-purpose tax burden and the debt-per-capita ratio would skyrocket 
from one of the lowest in the State of New Jersey to one of the 
highest.

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 Additional Responses by Randy Johnson to Questions from Senator Chafee
    Waste-to-energy (WTE) facilities may have higher fixed costs when 
compared to some landfills, leading some critics to argue that they are 
``less competitive''. The argument fails to recognized that Federal 
policy established by the Environmental Protection Agency during the 
prior two administrations supported the generation of energy from waste 
over landfilling because of the wiser use of resources and superior 
public benefits. In addition, at some WTE facilities, the ``tipping'' 
fees include an amount to repay coasts of other related debt and 
expenditures, such as recycling facilities, composting facilities and 
programs, household hazardous chemicals separation programs, and 
others--all of which under Federal environmental policy are considered 
preferable to landfilling. Accordingly, cost competition should not be 
the sole fact in determining the desirability of a particular waste 
management facility.
    It is also important to understand that merely because no local 
government has yet to default on its bonds, does not mean that they 
have adjusted ``better'' to the changed economic situation. It is 
essential for a county or city to maintain its access to the municipal 
bond market to continue to perform its governmental ft?nctions. The 
stigma associated with a downgrade or default is so great that there is 
extreme pressure on a local government to take remedial actions to 
maintain its credit rating. These remedial actions have been documented 
in credit reports issued by Standard and Poor's. They include raising 
property taxes, reductions in capital expenditures, imposition of new 
fees, water and sewer bill surcharges, surcharges on other services, 
drawdowns of unrestricted reserves, reductions in other governmental 
services and programs, loans from other governmental funds, 
cancellation of environmental projects and delay of maintenance on 
existing facilities.
    If ratings remain stable, it will be because of the many difficult 
and unjustifiable changes that will continue to be made by local 
governments in response to Congress' inaction. In addition to hardships 
already cited, affected local governments are increasingly encountering 
litigation and the threat of litigation, along with the payment of 
legal and other expenses, the need to renegotiate contracts with 
municipalities, higher financing costs, and others (see attached). Such 
``adjustments'' may improve the profit margins of private sector waste 
companies, but they do not necessarily serve the taxpayers, the public 
interest, or environmental protection.
    The focus on the ``issue-specific'' credit ratings that Standard 
and Poor's and other rating agencies have provided is important, but I 
would emphasize that this information is limited with respect to a 
specific bond issue for a project and not the governmental entity, per 
se. The ratings take into account the ability of a system to set and 
increase rates for a project, the flexibility the system has to 
establish new fees and revenue sources, and the revenues that are 
pledged for repayment. While increased taxes and fees, and other 
``adjustments'' necessitated by the lack of flow control authority are 
causing financial hardships as described above, the rating for the 
specific project would not be expected to change if the local 
government is able to make those adjustments, however painful, and 
those adjustments were factored into the initial ratings analysis for 
the facility.
                                 ______
                                 
    The argument that flow control results in ``above average tipping 
fees'' is based on an unfair comparison. Flow control tipping fees 
assessed at a specific disposal facility typically include the costs of 
other solid waste facilities and programs. Therefore, the tipping fees 
are sometimes higher than those charged at another similar/"average'' 
facility not encumbered with these additional costs. As noted by EPA in 
its Report to Congress on Flow Control and Municipal Solid Waste (March 
1995, at ES-57), ``[w]hen the [flow control-based] tipping fee is 
broken down into its component parts, prices are usually comparable for 
facilities [non-flow controlled] sited in similar locations and built 
about the same time'' (citing Moody's Public Finance, Perspective on 
Solid Waste, August 16, 1993, p. 3) Accordingly, in order to make the 
tipping fee at the flow controlled facility ``competitive'', reducing 
costs actually means abandoning funding of the other solid waste 
facilities and programs, or more typically, shifting those costs to the 
taxpayers instead of the waste haulers.
    In addition, flow control is not solely a question of local tax 
policy. Rather, the use of approaches such as flow control has been 
encouraged as a matter of Federal solid waste management policy. For 
example, in EPA's Variable Rates in Solid Waste: Handbook for Solid 
Waste Officials, Vol. I--Executive Summary 2 (June 1990), EPA 
discourages the use of property taxes to fund solid waste management 
because doing so would not ``giv[e] residents any incentives to reduce 
their waste. In fact, with the property tax method, residents never 
even see a bill, and generally have no idea how much it costs * * * 
(page 2, emphasis in original).
    See also William K. Reilly, Administrator, USEPA, Statement Before 
the Subcommittee on Environmental Protection, Senate Committee on 
Environment and Public Works (September 17, 1991) in which he 
discouraged the use of property taxes to recover the cost of municipal 
solid waste (MSW) management because the tme cost of MSW management is 
``hidden'' if property taxes are used.
    Nor does flow control ``artificially'' increase prices or impose a 
higher cost for a given category of services. In this connection, it 
should be noted that two of the witnesses who opposed flow control at 
the March 18 hearing (Messrs. Broadway and Norquist) referred to a 
study prepared for Browning-Ferris Industries (BFI) by National 
Economic Research Associates (NERA) to support the claim that tipping 
fees are higher for communities that rely on flow control in comparison 
to non-flow control jurisdictions. The BFI-NERA document, however, is 
inaccurate, invalid and uses distortion to portray flow control as more 
expensive. The Department of Environmental Services of the State of New 
Hampshire evaluated the BFI-NERA document and found, contrary to the 
document's authors, that in two of the three case studies presented, 
waste disposal at a flow-controlled facility is actually less expensive 
than at similar private facilities. The New Hampshire DES' conclusions 
regarding the BFI-NERA study are as follows:

        The NERA study is flawed in its assumptions, reporting results, 
        and conclusions. Misleading use and reporting of statistics 
        undermines the validity and credibility of the results reported 
        from NERA's economic analysis. In both its modeling and case 
        study analysis, NERA confounds tipping prices with the actual 
        cost of providing MSW disposal, a decision which has the 
        inevitable effect of creating an apparent price advantage for 
        privately operated facilities. Erroneous assumptions about the 
        cost of transporting MSW to alternative disposal facilities 
        unfairly deflate the reported cost of using these facilities. 
        Meanwhile, omitting the cost of integrated waste management 
        services provided by public, flow-controlled facilities 
        unfairly inflates the reported ``tipping fees'' charged by 
        these facilities, and results in a false comparison of disposal 
        costs at the public compared to the private facilities (which 
        offer no such services).

    Moreover, contrary to the implication of this question, local 
governments generally cannot ``cut costs'' for MSW management without 
cutting services. The fact is that flow control-based tipping fees 
often recover, in addition to MSW disposal costs, the costs of 
environmentally protective waste management services such as recycling 
and household hazardous waste collection--services that ``generally do 
not lend themselves to the generation of their own revenues''. EPA 
Report to Congress on Flow Control and Municipal Solid Waste (March 
1995, at ES-11). While raising local taxes to fund such programs may be 
a new de facto Federal policy forced upon local government, it is 
disingenuous to ignore the Federal policies encouraging alternatives to 
landfills and diversion programs, and the State mandates that require 
local governments to provide such services.
                                 ______
                                 
    I do not agree that flow control has no impact on the protection of 
human health and the environment merely because Federal landfill 
regulations are in place. Prior to the mid-70's, more than 90 percent 
of municipal solid waste was landfilled. In 1976, in the Resource 
Conservation and Recovery Act, Congress found that ``land is too 
valuable a resource to be needlessly polluted by discarded materials.'' 
Subsequently, the Environmental Protection Agency issued guidelines 
that declared that landfills are the least environmentally-preferable 
method of handling solid waste, and should be utilized only after all 
other alternatives are exhausted.
    Local governments throughout the country embarked on a mission to 
divert waste from landfills to the maximum extent possible. Through 
waste separation facilities, recycling programs, composting facilities, 
educational initiatives, and energy recovery facilities, billions of 
dollars have been spent to decrease America's reliance on landfills. 
These efforts have made a significant impact, reaching a national goal 
of 25% source reduction and recycling. For the first time in decades, 
the number of operating landfills in the United States has dropped 
below 4,000.
    Disposing of MSW in landfills--even those landfills regulated under 
Subtitle D requirements--is no guarantee of environmental protection 
and public health. Subtitle D provides minimum requirements for siting, 
operating, monitoring, corrective action, and closure and post-closure. 
However, even the best landfill liner and leachate collection system 
will ultimately fail due to natural deterioration, according to EPA.
    In the Criteria for Municipal Solid Waste Landfills that 
accompanied the Subtitle D regulation, EPA stated that ``once the 
[landfill] unit is closed, the bottom layer of the landfill will 
deteriorate over time, and consequently, will not prevent leachate 
transportation out of the unit [into the groundwater.]'' Leakage from 
landfills into groundwater carries with it chemicals contained in 
household hazardous wastes and small-quantity generator wastes from 
commercial operations.
    Air emissions from landfills also can negatively affect health and 
the environment. Landfill gas is about half methane and half carbon 
dioxide with minimal amounts of other gases, including benzene and 
vinyl chloride. Non-methane hydrocarbon emissions are also significant 
contributors to ozone loading in non-attainment areas. EPA requires 
certain large landfills to control such gases, but even those landfills 
will capture, at maximum, only about 75%-80% of the generated gas, 
according to EPA's analyses.
    There is no doubt that some landfills are more environmentally 
protective than others. A double-composite liner composed of plastic 
sheeting and compacted soil will provide a higher level of 
environmental protection than a landfill with a single liner. A methane 
emission collection system is likely to minimize air quality problems 
compared to a facility that merely flares off the gases. Yet the 
Subtitle D regulations mandate compliance with only the minimum 
requirements, requirements that many older landfills, and some newer 
landfills, have difficulty meeting. Under a ``free market'' system, 
waste naturally flows to landfills that provide the least environmental 
protection because it is always cheaper to use management methods that 
barely meet environmental standards than to create new systems, or 
alternatives to landfills, that provide significantly more 
environmental protection.
    States and local governments which have invested heavily in systems 
and programs which minimize the amounts and types of wastes sent to 
landfills fear that the progress that they have achieved is in 
jeopardy. If the policy of the United States is reversed; if the goal 
of finding alternatives to burying waste is no longer viable; if the 
emphasis on innovative approaches to diversion--approaches which do not 
produce profits--is over, States and local governments have wasted many 
years and billions of dollars. More importantly, public health and 
environmental protection will be ill-served by such a change in 
direction.
                                 ______
                                 
    Additional Responses by Randy Johnson to Question from Senator 
                               Lieberman
    Opponents of flow control fail to understand that any perceived 
``inefficiencies'' (by which they mean higher tipping fees) associated 
with flow control facilities is based on an inaccurate comparison with 
the tipping fees at landfills. As noted elsewhere in these answers, 
local governments provide far more than mere burial of trash. New 
technologies and innovative alternatives to landfill disposal are 
admittedly more expensive and experimental than landfills; that is why 
such technologies have been encouraged and utilized primarily by the 
public sector and financed with tipping fee surcharges.
    While some landfills may provide somewhat higher levels of 
environmental protection than others, there is little if any incentive 
for landfills to attain greater ``efficiencies'' because landfills 
sited since the Subtitle D regulations must meet the same minimal 
standards. The Federal government does not require that such landfills 
be upgraded or improved to exceed the standards. (See answer to 
previous question.) Even if a private landfill can cut its costs of 
operation, there is no assurance that any significant cost savings are 
passed along to the consumer as long as the then-current tipping fee is 
set at a level that the market will tolerate. To do otherwise is 
contrary to a profit-based system.
                                 ______
                                 
   Additonal Response by Randy Johnson to Question from Senator Boxer
    Question. Much of this debate has focused on the economic impact of 
flow control. I have heard from private companies from California and 
across the country that flow control limits competition, creates 
inefficient local monopolies, increases disposal costs, and interferes 
with the free market. I have heard from almost every California county, 
and many California cities, that the flow control is vital to their 
ability to manage solid waste. What do you think? Does flow control 
limit competition and increase garbage management costs? What effect 
would a failure to authorize flow control have on the economies of 
municipal solid waste disposal?
    Response. It is important to understand that in many States in this 
country, counties and other local governments are mandated by State law 
to handle garbage and trash. In addition, State legislatures establish 
recycling and/or waste reduction quotas, to be met by legislatively-
mandated deadlines. In California's case, local governments incur 
financial penalties for not meeting the State's recycling targets and 
deadlines.
    California and many other States also impose bans on the disposal 
of specific materials in landfills and incinerators, leaving recycling 
or reduction as the only option generally available to local 
governments. In addition, services such as household hazardous 
chemicals collection, and yard waste diversion are frequently mandated 
by State law on counties and municipalities.
    The necessity of recycling and reduction of solid waste--a mandate 
that falls squarely on the shoulders of municipalities and counties, 
not private waste haulers--is the major reason why it is inaccurate to 
compare the costs of comprehensive solid waste management systems with 
the costs of a private operator merely burying trash in the cheapest 
location available.
    Any discussion of the cost differential between comprehensive waste 
management services provided by a public entity utilizing flow control, 
and private facilities that charge a low disposal fee (and provide no 
other services), must be an ``apples-to apples'' comparison. Local 
government fees generally recover, in addition to disposal costs, the 
costs of State-mandated waste services--services which do not lend 
themselves to generation of their own revenues. Disposal costs are only 
a small part of the picture, but if only disposal costs are compared, 
prices are usually comparable for public and private facilities sited 
in similar locations and built about the same time. (citing Moody's 
Public Finance, Perspective on Solid Waste, August 16, 1993, p. 3)
    Flow control is not only competitive, in fact, it enables many 
small trash hauling companies to survive and flourish. When a county or 
city enters into a franchise agreement or long-term contract with a 
private hauler, each hauler pays the same disposal fee at the flow-
controlled disposal or recycling facility. Thereby, the small hauler is 
able to compete with the large vertically-integrated waste companies 
that own their own landfills, transfer stations and tmcks. Flow control 
has provided a ``level playing field'' for the small haulers, who know 
that they have a disposal site with a set price, rather than at prices 
controlled by the industry giants.
    There is already strong evidence that the future of small 
businesses in the solid waste marketplace are in jeopardy, causing 
concern for competitiveness in the waste industry. The January 1995 
issue of World Waste reported that since 1990 the two largest waste 
companies in the United States had acquired over 1,000 smaller waste 
haulers and landfill operators. The trend is continuing at a record 
pace. In 1994 alone, one of those two companies reported that it had 
acquired 115 additional small waste companies. If local governments are 
not allowed to manage solid waste in their communities, the giants of 
the industry will continue their march toward a cartel of companies 
that can manipulate the marketplace, control prices and eventually 
eliminate competition altogether.
                                 ______
                                 
    Congress' failure to authorize flow control is already having an 
effect on the economics of municipal solid waste flow control. In order 
to retain a portion of the revenues to repay the debt issued for solid 
waste facilities such as transfer stations, recycling center, 
landfills, and waste-to-energy incinerators counties and cities have 
been forced to lower the fees collected at the facilities. In some 
cases, the lower fees have mitigated the exodus of trash haulers who 
otherwise would be delivering their loads to distant less-expensive 
landfills or out-of-state facilities. As a result, the reduced revenues 
have forced local governments to find other methods of repaying their 
bonds--in several cases those methods have included increasing local 
taxes (see attached).
    In other cases, local governments have found it necessary to cut 
back on recycling services, composting programs, household hazardous 
chemical collection programs, environmentally-sound closure of old 
landfills, and other innovative waste reduction programs. Such programs 
are not income-producing, therefore without ``subsidies'' from waste 
disposal fees or local tax-supported revenues, they are activities that 
many local governments simply cannot afford. When comprehensive MSW 
systems have to ``compete'' with a private company--whose only interest 
is burying trash in the ground at the cheapest site available--the 
progress made in America since the late 70's toward diverting waste 
from landfills is in jeopardy.
                                 ______
                                 
    Additional Responses by Randy Johnson to Questions from Senator 
                               Lautenberg
    Waste-to-energy facilities and garbage combusters are economical 
under the terms in place at the time of their development. Local 
jurisdictions and solid waste authorities entered into contracts and 
agreements relying on their legally-upheld flow control authority to 
commit their solid waste to a site for 20-30 years in return for long-
term assurance that environmentally-safe disposal was available at a 
price certain. As noted in the statement of the Government Finance 
Officers Association (GFOA) to the committee, the prices that were 
negotiated years ago were ``sound''. Waste-to-energy facilities were 
built in a competitive marketplace that required vendors to assume the 
risk of providing a 20-year minimum disposal location at an agreed-upon 
price that was, in most cases, competitively bid.
    Communities relied upon their authority to control the flow of 
solid waste--authority that was upheld by the courts on numerous 
occasions. Public officials and bond holders had no reason to believe 
flow control authority was in jeopardy. ``There is no discussion of any 
legal challenges to flow control because during this period of time 
[when project bonds were sold], there had been no attacks of the 
practice on Commerce Clause grounds,'' notes the GFOA statement. The 
lack of certainty for trash disposal and the inability to budget based 
on the increasing cost of waste management were much greater risks to 
communities at the time. Public officials responded by significantly 
minimizing their risks through long-term contracts and agreements, 
assuring reliable and responsible waste disposal.
                                 ______
                                 
    With regard to the question about Hennepin County's fees at the 
waste-to-energy plant, it is important to understand that the $95/ton 
tipping fee charged by the County supported the County's comprehensive 
environmental program, of which converting waste to energy was just one 
piece. The plant itself did not charge $95/ton; the charge was imposed 
by Hennepin County to pay for the entire program which included the 
transportation of solid waste to two different plants. The 
transportation and processing costs for these plants was, in fact, $65/
ton. The additional amount supported a comprehensive integrated 
environmental program which includes the following:
     a household hazardous waste (HHW) collection program at 
two permanent facilities open five days a week;
     neighborhood HHW collection programs in the Spring and 
Fall
     tree recycling program
     commercial materials exchange program to reduce waste
     commercial hazardous waste licensing and inspection 
program
     education and training program for hazardous waste 
generators
     consumer electronics program to dismantle and recycle 
televisions and VCR's
     household battery collection and recycling program;
     fluorescent light tube collection and recycling program; 
and
     public education on proper handling of all these wastes.
    The total cost for one of the most comprehensive environmental 
programs in the nation was borne by the tipping fee and paid by the 
waste haulers prior to the Carbone decision. Following that decision, 
Hennepin County shifted the costs to their citizens to pay for the same 
programs. The tipping fee was lowered and additional revenues were 
collected by a service fee, collected by waste haulers from their 
customers, as a percentage of collection and disposal costs, and paid 
to Hennepin County. In addition, a solid waste service fee was 
collected as separate ``line item'' on the property tax statement of 
homeowners and businesses.
    Despite their objections to paying for the services they receive, 
the City of Minneapolis from the beginning of the County program has 
received direct benefits from the environmental facilities and 
activities. The City has benefited from the household hazardous waste 
program, the commercial hazardous waste inspection and training 
program, and the collection of household batteries, fluorescent light 
tubes, tires, oil, and consumer electronics.
    While the costs have been shifted to a different set of tax and 
fee-payers, Minneapolis residents are still paying for the County's 
comprehensive environmental program. They are paying through a $41/ton 
tipping fee, plus a service fee of 6\1/2\ percent on the collection and 
disposal of solid waste, plus a solid waste fee of .019 percent of the 
taxable market value of property. These three sources of revenue are 
supporting the same programs that were previously paid for with the 
$95/ton tipping fee. The County continues to provide outstanding 
environmental services to the citizens of Hennepin County, including 
the residents of Minneapolis. The attached list shows the scope and 
results of the County's programs.
                                 ______
                                 
       Statement of Grover G. Norquist, Americans for Tax Reform
                            i. introduction
    Chairman Chafee, members of the committee, and ladies and gentlemen 
in the audience, thank you for the opportunity to address you.
    My name is Grover Norquist and I am the president of Americans for 
Tax Reform (``ATR''). As you may know, ATR is an organization comprised 
of individuals, corporations, and associations that favor lower taxes, 
less regulation, and a smaller Federal Government. We do not accept any 
Federal grant money nor do we benefit from specific Federal programs.
    I come before you today to speak briefly about the free market, 
taxes and flow control legislation.
           ii. americans for tax reform opposes flow control
    Americans for Tax Reform believes that flow control promotes 
wasteful and inefficient practices at the expense of free market 
principals. It is anti-competitive, anti-taxpayer, and anti-growth. How 
else would one define the practice of permitting local governments to 
set up government-run trash disposal monopolies that virtually 
eliminate private-sector competition?
    In essence, flow control dictates where municipalities and 
businesses send their waste, and then artificially sets prices for 
disposal at above-market rates. These additional expenses are passed 
directly on to consumers in the form of higher costs for goods and 
services. In effect, flow control is a stealth tax. It is critical to 
remember that such costs will not be borne solely by corporate 
America--individuals, families, senior citizens and persons on fixed 
incomes will all shoulder the tax burden of flow control, and the 
larger government bureaucracy that it requires.
    Moreover, the concept of flow control goes against free market 
principles. As you may know, the Supreme Court struck down local flow 
control regulations in 1994 in the case of Carbone v. Clarkstown, NY. 
The Court found that State-mandated flow control infringed upon 
interstate commerce. ATR believes that any interference with 
unrestricted movement of goods and services undermines the free market, 
and therefore, harms the American taxpayer.
    At a time when Congress is empowering communities and individuals, 
in such cases as welfare reform and agricultural policy, the last thing 
our elected officials should consider is concentrating more power in 
the hands of elected officials. One cannot reconcile a theoretical 
commitment to a leaner and smarter government with the concept of a 
State-run monopoly that precludes private sector competition.
                     iii. the costs of flow control
    ATR is proud to join with other champions of the free market on 
this issue. As Jersey City Mayor Brett Schundler so eloquently put it, 
flow control legislation ``would institutionalize one of the worst 
excesses of the `big government knows best' mentality that has long 
dominated Congress . . . . We're forced to spend money on waste 
disposal that we would rather use for schools or police.''
    We've also seen a broad and diverse business coalition form around 
this issue. Representing organizations such as the National Federation 
of Independent Business, the National Restaurant Association, the 
National Association of Manufacturers, and the Association of Builders 
& Contractors, the Coalition Against Oppressive Flow Control has 
written: ``Small business owners strongly oppose flow control because 
it would allow local governments to dictate where small business must 
send their waste and it allows these governments to set monopoly 
prices.''
    In another statement, the National Association of Manufacturers 
says: ``flow control embodies the worst of all government monopolies--a 
hidden tax in the form of higher prices, reduced efficiency, a more 
intrusive government and a stifled free market.''
    And finally, Karen Kerrigan of the Small Business Survival 
Committee has explained: ``Flow control is nothing short of centralized 
State planning that harms individuals, families, and businesses. It 
raises taxes, increases the size of government and hurts American 
consumers.'' I couldn't agree with them more.
    Perhaps as a way of summary, let me present four arguments against 
flow control. In so doing, I also hope to answer the Chair's questions 
about what happens to communities in the absence of such regulation.
    (1) Flow control is nothing but a trash tax. ATR firmly believes 
that a vote to reinstate the practice of flow control is a vote to 
raise taxes. Flow control is a stealth tax--a hidden burden imposed on 
families and businesses by artificially inflating the price of waste 
collection. The American people already pay too much in taxes. We do 
not need yet another tax increase. Voters know that taxes on businesses 
are ultimately borne by consumers and taxpayers in the form of higher 
prices, lower economic growth, and fewer jobs. ATR will work to make 
sure that the American people understand the harm done to them if flow 
control is enacted.
    (2) Flow control costs jobs. We know that flow control means small 
business can no longer shop around for the best price for its trash 
collection. Consequently, entrepreneurs face higher prices and have 
less money to pay their workers or hire new ones. Moreover, with scarce 
resources being diverted to pay increased ``garbage taxes,'' there is 
less money for businesses to invest in their own communities. That 
means fewer private-sector jobs.
    (3) The cost of waste disposal is declining thanks to free market 
principles already in place. In the 3 years since local flow control 
was suspended, the price of waste collection has dropped. Contrary to 
the dire predictions of unelected bureaucrats, communities are not just 
surviving, but actually growing without flow control in place. The free 
market has forced inefficient government agencies that used to rely on 
flow control to become more efficient. This has lead to lower costs for 
homeowners and small businesses. For example, people under the 
regulation of Virginia's Southeastern Public Service Authority have 
seen prices cut by over 20 percent. Within Hennepin County, Minnesota, 
disposal prices have been slashed by 50 percent, from a high of $95/ton 
to $41/ton. In contrast, a study by the National Economic Research 
Associates reveals that flow control can actually increase the cost of 
waste collection by as much as 40 percent.
    (4) Flow control impedes market-oriented environmental and 
recycling efforts. The EPA has found that flow control fails to 
facilitate recycling or create other environmental benefits. I never 
thought that I would be united with Greenpeace, the Sierra Club, and 
the Audubon Society, but on this issue we agree. According to one 
environmental activist: ``Flow control laws discourage environmental 
innovation . . . Congressional authorization of flow control could 
inhibit the development of alternative waste management options, 
including market-driven recycling efforts. Flow control laws 
unnecessarily inhibit the ability of recyclers and other ecological 
entrepreneurs to compete in the marketplace.''
                             iv. conclusion
    As many of you know, I have relentlessly fought over the years for 
a smaller Federal Government and lower taxes. There could hardly be a 
better example of how Washington could threaten these principles than 
today's fight over flow control. The lines are cleanly drawn in this 
battle. On one side are the flow control proponents advocating a 
government-sanctioned monopoly. On the other side are the champions of 
the free market, American consumers, and the millions of small 
businesses across our nation. The choice could not be clearer.
    Americans for Tax Reform strongly urges this committee to protect 
American taxpayers and strike a blow for the free market. We urge you 
to oppose anti-competitive, anti-small business and anti-taxpayer 
programs such as the proposed flow control regime.
                                 ______
                                 
Statement of John Broadway, National Federation of Independent Business
    Good morning. On behalf of 600,000 members of the National 
Federation of Independent Business (NFIB), and 11,000 members in 
Virginia, I appreciate the opportunity to present the views of small 
business owners on the subject of flow control.
    By the way of introduction, NFIB is the nation's largest business 
association representing a broad cross section of American businesses. 
About 50 percent of our membership is in the service and retail 
industries, about 25 percent are in manufacturing and construction, and 
the rest are in businesses ranging from agriculture to wholesale 
services. NFIB's typical member has five employees and grosses about 
$350,000 in revenue annually.
                                overview
    The vast majority of small businesses are customers of waste 
disposal services. However, NFIB also represents a number of small 
waste haulers and recyclers. Consequently, any efforts to maintain and 
expand the use of flow control ordinances negatively effect small 
business owners. The reasons are quite simple. Flow control ordinances, 
which force waste disposal customers to use government-mandated waste 
facilities, create monopolies under which small business owners will 
most likely pay higher costs and receive inferior service.
    Monopolies, by their very nature, give an advantage to one entity 
at the expense of all others. It makes little difference whether the 
local government or a separate entity with a long-term contract run the 
waste disposal facility. Because monopolies don't have to face free 
market competition, customers have no power to bargain for better rates 
and service.
                   concerns of small business owners
    Flow control ordinances have the most obvious impact on price. 
Currently, in communities where no ordinances exist, haulers, 
processors, and recyclers compete for market share. As a result, 
customers can purchase disposal and recycling services that are 
efficient, safe and cost effective. On the other hand, where ordinances 
do exist, prices are artificially set to ensure a specific payout, and 
in some instances the prices are inflated to pay for other municipal 
services as well. These monopolies limit choice and place a very real 
tax on small business.
    This tax burden, often referred to as a tipping fee, is not 
inconsequential. Studies conducted by the NFIB Education Foundation 
indicate that typical NFIB members take out of their businesses less 
than $40,000 annually to support themselves and their families. 
Clearly, the price of any service, and particularly one that is as non-
discretionary as waste disposal, can be a significant expense for a 
small business. In fact, a study by the National Economics Research 
Associates found that flow control increases disposal costs by an 
average of 40 percent. When small business owners are required to use a 
government-mandated disposal operation that faces no price or quality 
competition, they are virtually guaranteed poorer service and higher 
prices.
    A second impact of monopolistic flow control ordinances is 
inefficiency. Instead of building disposal services to respond to need, 
flow control ordinances result in facility-driven systems. Government-
backed facilities do not need to seek business to stay in business: 
they are guaranteed a return on their investment. There is no incentive 
to improve the disposal facility, to implement new technology, to 
attempt to cut costs, or to pass any savings on to the customer.
    In addition, because these facilities are built without regard to 
market conditions, they are often oversized, built to receive volumes 
of waste considerably in excess of volumes projected in a free market 
environment.
    Flow control ordinances can also negatively affect environmental 
quality. Small business owners want the ability to ensure that their 
waste is being properly disposed. They and their families live in their 
communities--they drink the water and they breathe the air. In 
addition, they face enormous liability for the waste they generate if 
it is not disposed of responsibly. As the committee is aware, NFIB has 
been very active this Congress and in the past in the Superfund debate 
because of the serious problems small business owners face in dealing 
with past disposal problems.
    With respect to flow control ordinances, waste generators may be 
forced to send their waste to facilities that are environmentally 
unsafe, leaving them with potentially huge liabilities. Waste 
generators should be able to control their own liability and their 
quality of life by choosing the facility that has the safest standards.
    NFIB also represents a number of small haulers and recyclers. With 
flow control ordinances in place, it is highly unlikely that these 
small businesses would be able to compete for long-term contracts. They 
will, in effect, lose any opportunity to provide these services or fill 
new niches in the market as new technologies develop.
    Arguments are made that counties and municipalities need flow 
control ordinances to plan for present and future waste management. 
While such planning may be desirable, there are better ways to manage 
it than by interfering in free markets. It is a myth that waste 
management requires flow control. Such management by local governments 
can be performed through regulating the quality of service, not by 
performing it themselves or by establishing long-term exclusive 
contracts.
    I think a good example of that is going on in Virginia right now. A 
few years ago, the city of Richmond and 12 surrounding counties and 
other independent cities formed the Central Virginia Waste Management 
Authority. One of their goals from the beginning has been to maximize 
the existing private waste management companies.
    In fact, the director of the authority, Kevin Burns, has written 
``Unlike most other regional authorities, this authority has 
implemented all of its programs through private service contracts for 
recycling and other waste management services. The result has been the 
development of an integrated regional waste management program. The 
public investment in contract services is stimulated with the creation 
of private competition, jobs and a private tax base.''
                          pending legislation
    It should be made clear from my testimony that small business 
owners do not support flow control ordinances. However, they are not 
insensitive to the plight of many communities that have on-going 
facilities in place. If the committee must pass some flow control 
legislation, NFIB strongly urges that only a strictly limited 
grandfather provision be established. Specifically, we do not believe 
that communities that currently have on-going programs should be 
destined to live under flow control ordinances into eternity. Once the 
currently operating facility's useful life is finished, any 
grandfathered flow control ordinance should end. And certainly, any 
community that had passed an ordinance and was merely in the planning 
stages of building a facility should not be protected from the free 
market.
    Small business owners face many hurdles in maintaining their 
businesses, creating jobs, and generating revenue for their 
communities. They should not be faced with added costs and poorer 
service that results from monopolistic flow control ordinances. NFIB 
urges the committee to consider the negative consequences of 
establishing long-term monopolies that force small businesses to 
purchase services from a single supplier. It is not in the best 
interests of small businesses or the nation as a whole.
    Thank you for the opportunity to be here today. I would be happy to 
answer any questions.
                                 ______
                                 
    Statement of David K. Leff, Assistant Commissioner, Connecticut 
                 Department of Environmental Protection
    Good morning. My name is David Leff. I am Assistant Commissioner of 
the Connecticut Department of Environmental Protection. I am 
accompanied today by Robert Wright, Acting President of the Connecticut 
Resources Recovery Authority. The Authority has been responsible for 
the financing and development of four of Connecticut's six waste to 
energy projects. Thank you for this opportunity to provide testimony on 
the significant impact which the U.S. Supreme Court decision in the 
matter of C&A Carbone, Inc. v. Town of Clarkstown has had on the solid 
waste management system in the State of Connecticut.
    By Connecticut statute, each municipality must make provision for 
the safe and sanitary disposal of solid waste generated within its 
boundaries. More than a decade ago, it became clear that this could no 
longer be achieved through the use of traditional municipal landfills. 
Stricter environmental regulations, limited geologically appropriate 
sites, and public opinion prevented the siting of new municipal solid 
waste landfills as old landfills were rapidly reaching their capacity. 
In order to fulfill their statutory obligations, the municipalities, 
with the help of the State Department of Environmental Protection and 
the Connecticut Resources Recovery Authority, created interlocal 
agreements to develop sufficient waste-to-energy facilities to serve 
the State's needs, approximately 2.2 million tons per year of statewide 
capacity. The premise of this integrated waste management system of 
transfer stations, waste-to-energy facilities and residue landfills was 
that it is a State's responsibility to be as self-sufficient as 
possible in its waste disposal practices.
    As you know, waste-to-energy projects are not inexpensive. Their 
development required the issuance of hundreds of millions of dollars of 
revenue bonds secured by the full faith and credit of the 
municipalities associated with each project. The bonded indebtedness 
for Connecticut's six waste-to-energy facilities is now about $750 
million.
    At the time that the projects were developed, the municipalities 
anticipated that the fixed costs of paying off the bonds could be paid 
through a combination of energy revenues, disposal or ``tipping'' fees 
from member towns committed to the projects, and from towns and haulers 
which used the projects on a periodic or ``spot'' basis. This was a 
reasonable expectation since per capita waste generation was 
increasing, Connecticut's population was growing, and demand for 
disposal capacity was high, driving the cost of ``spot'' tipping fees 
well above the level of member tipping fees.
    It was in this context that the municipalities signed long-term 
``put-or-pay'' contracts to guarantee payment of the bonds issued for 
the projects. Through these contracts, they committed to delivering a 
minimum annual tonnage of municipal solid waste to their respective 
projects and to pay the difference in tipping fees if they failed to 
deliver that minimum amount. To ensure that they would never fall below 
their minimum tonnage commitments, the municipalities passed flow 
control ordinances, requiring that municipal solid waste generated 
within their borders be disposed at the waste-to-energy facility to 
which they were contractually committed. The ordinances vary from 
municipality to municipality, but their basic structure was to assure 
that adequate waste was delivered to meet the ``put-or-pay'' 
commitments.
    One hundred and thirty-seven of Connecticut's 169 municipalities, 
representing 86% of its population, have long-term ``put-or-pay'' 
contracts with one of the State's waste-to-energy facilities. Five 
municipalities continue to use Connecticut's three remaining municipal 
solid waste landfills. The other municipalities either send their 
municipal solid waste out-of-state or utilize one of Connecticut's 
waste-to-energy facilities on a spot market basis.
    For almost a decade, these waste-to-energy projects have enabled 
the municipalities to fulfill their statutory solid waste disposal 
obligation in an environmentally superior manner. And when the State 
passed its Mandatory Recycling Act in 1987, these projects provided a 
basis for the development of a new recycling infrastructure, including 
several materials recovery facilities. As of fiscal year 1995, 
Connecticut recycled about 23% of its municipal solid waste, with a 
statutory goal of reaching 40% by the year 2000. The State sent 59% to 
waste-to-energy projects in State, landfilled 17% in State, and 
disposed of only 1% out-of-state. In short, Connecticut had carefully 
established an environmentally responsible and comprehensive municipal 
solid waste management system.
    By the early 1990s, Connecticut's economy had slowed significantly, 
and its population stopped growing, so the anticipated increase in 
solid waste generation did not occur. In addition, the recycling rate 
rapidly increased from less than 10% to about 23% after 1991. This 
meant that there was less Connecticut waste requiring disposal than had 
been projected when the waste-to-energy projects were designed and 
developed. Despite these changes, most municipalities continued to meet 
their contractual commitments to deliver waste to their respective 
projects.
    The Carbone decision dramatically changed the economics of 
Connecticut's waste-to-energy projects and put the State and the 
municipalities contracted to the projects at great risk. Without flow 
control, haulers have more disposal options, so Connecticut's waste-to-
energy facilities have had to lower their spot market tipping fees to 
compete for spot tonnage. Since the 1980s, the spot market rates have 
dropped 30-50% in Connecticut. Lower spot market revenues combined with 
unchanging energy revenues meant that member tipping fees have had to 
increase so that the fixed costs of the waste-to-energy facilities 
could be paid. This put an additional and unexpected burden on the 
municipalities.
    The increasing differential in tipping fees provided a further 
incentive for those haulers who paid the tipping fees directly to 
divert member town waste from the waste-to-energy facilities to which 
the towns were committed. The Carbone decision legitimized this 
diversion and created a vicious cycle. The less member waste that was 
delivered to the projects, the higher the member tipping fee had to be 
to cover the projects' fixed costs. The higher the member tipping fee, 
the greater the incentive to divert waste to a less expensive disposal 
facility. As of fiscal year 1996, more than half of the Connecticut 
municipalities with minimum tonnage commitments did not meet them. In 
some cases, the shortfall was quite small and in some projects the 
overages of other member towns made up the shortfall so individual 
municipalities were not penalized.
    The diversion of member waste from Connecticut's waste-to-energy 
facilities was at first gradual probably because private haulers 
believed that Congress would enact legislation to authorize flow 
control, at least in States whose solid waste management systems 
depended on it. During the last year, however, haulers have become more 
aggressive in redirecting waste to other facilities because Congress 
has not taken action. Even those projects which were meeting their 
commitments in fiscal year 1996 are experiencing substantial decreases 
in tonnages delivered to their facilities. For example, the Bristol 
Resource Recovery Facility Operating Committee, an interlocal which 
developed a 237,250 tons per year facility serving 14 municipalities, 
has recently documented a 20% loss in tonnage. This facility has never 
experienced such a shortfall and attributes it to the diversion of 
waste by private haulers to other disposal facilities. The Operating 
Committee estimates that this reduction will result in an annual loss 
of revenue from tipping fees and reduced energy production of 
approximately $450,000.
    The Housatonic Resource Recovery Authority (HRRA), which is a 
quasi-public solid waste management authority in the Danbury area, 
reported that tonnage decreased 41% during the month of February alone. 
HRRA attributes the reduction to a new hauler taking waste to a 
facility other than the one to which the Housatonic municipalities are 
committed. If this situation continues, the municipalities will fall 
well below their annual put-or-pay commitment. The HRRA has stated that 
it is not aware of any reduction in disposal costs being passed on to 
consumers by virtue of the hauler using a facility with a lower tipping 
fee.
    A spokesperson for the Southeastern Regional Resource Recovery 
Authority, which helped develop a 251,485 tons per year waste-to-energy 
facility Southeastern Connecticut, notes that if municipalities have to 
tax their citizens to pay penalties for not delivering their annual 
tonnage minimums, residents will actually end up paying twice--once to 
their individual haulers and once through their municipal taxes.
    A further consequence of this situation is that there is no longer 
incentive for municipalities to promote their recycling programs 
because increasing recycling tonnages would further exacerbate their 
difficulty in meeting put-or-pay waste-to-energy commitments. Although 
every one of Connecticut's municipalities has a curbside recycling 
program in place, the State's recycling rate has remained flat at 23% 
for the last three years. Municipalities which had recycling 
coordinators are laying them off, and initiatives to encourage 
increased business and institutional recycling are on hold.
    An effective and environmentally desirable system which was built 
in good faith by responsible public officials is being destroyed by the 
lack of flow control legislation. This is clearly not consistent with 
the solid waste management hierarchy adopted by Connecticut or the 
Federal government. And it has the potential to do great financial 
damage to Connecticut's municipalities and to the State as a whole. 
Moody's Investors Service has already downgraded $109,340,000 of bonds 
issued to support the Southeastern Connecticut Project. The seventeen 
municipalities which have guaranteed the revenues for this project are 
now confronted with a possible significant reduction in access to 
public financing and increased finance costs. Moody's has currently 
placed $152,840,000 in bonds issued for CRRA's Bridgeport 821,250 tons 
per year facility on its ``unstable-credit watch'' category.
    The National Association of Counties, National League of Cities, 
Governmental Finance Officers Association, Solid Waste Association of 
North America, American Public Works Association, Local Government 
Coalition for Environmentally Sound MSW Management, and the National 
Coalition for Flow Control sent a letter dated February 26, 1997, to 
Congress which documented other cases resulting from the loss of flow 
control and requested Federal flow control legislation. Connecticut is 
concerned that action must be taken soon to protect municipalities 
which acted in good faith to manage their solid waste disposal from the 
type of financial crisis faced by Orange County, California.
    If the municipalities are unable to meet their contractual 
commitments to their waste-to-energy facilities and are forced to 
default on the approximately $750 million in bonds which financed them, 
municipalities and the State will suffer even greater financial 
consequences. But this will happen only after severe hardship for the 
municipalities, and it will add a tremendous burden to a State which is 
only now seeing signs of economic recovery after a long, long period of 
recession.
    Connecticut supports the premise that the management of solid waste 
should continue to be a function of State, regional, and local 
government, and our municipalities are taking appropriate measures to 
manage their problems. But the future without flow control is not 
bright. Last session the State of Connecticut supported S. 534, known 
as the Interstate Transportation of Municipal Solid Waste Act of 1995, 
which would have provided Connecticut municipalities with adequate flow 
control protection. We urge the Senate to pass similar enabling 
legislation this session which supports Federal flow control.
                                 ______
                                 
 Responses by David K. Leff to Additional Questions from Senator Chafee
    Question 1. On page 3 of your testimony, you discuss how growth 
projections in Connecticut did not turn out to accurately predict the 
future because of the recession in the Northeast. How much of 
Connecticut's current problem is due to loss of flow control as opposed 
to inaccurate predictions of future growth rates?
    Response. The problem is primarily due to lack of flow control. All 
solid waste facilities in Connecticut are required to submit quarterly 
tonnage reports to the Department of Environmental Protection which 
include the source, type and amount of waste handled by each facility 
and, in the case of transfer stations, the destination of waste shipped 
for disposal. Reports from two private transfer stations located in 
Southwestern Connecticut, one of which began handling municipal solid 
waste in 1996, clearly demonstrate that waste which prior to the 
Carbone decision was being disposed in Connecticut is now increasingly 
flowing out-of-state. This waste export phenomenon is clearly unrelated 
to the fact that Connecticut's population did not increase as quickly 
as projected. The chart below illustrates the point. It includes the 
amounts and percentages of municipal solid waste generated in 
Connecticut and shipped out-of-state by these two facilities.

 Two Private Regional Transfer Stations in Southwestern Connecticut (BFI section of Stratford TS and NRS Norwalk
                                                     TS*)                                                       
----------------------------------------------------------------------------------------------------------------
                                                                                                Disposed Out of 
                      Fiscal Year                        Total MSW Handled   MSW Disposed Out      State (In    
                                                                                 of State         percentage)   
----------------------------------------------------------------------------------------------------------------
\1/2\1997..............................................             71,745             67,755               94.4
1996...................................................            102,973             80,067               77.8
1995...................................................             34,627             22,296               64.4
1994...................................................             42,917             12,085               28.2
1993...................................................             30,940              2,219                7.2
----------------------------------------------------------------------------------------------------------------
*NRS Nonwalk Transfer Station did not begin to accept municipal solid waste until FY 1996.                      

    Connecticut anticipated in its 1991 Statewide Solid Waste 
Management Plan that the State's population would increase 9.2% from 
1985 to the year 2010 but that there would be no increase in solid 
waste generation due to source reduction education and the State's 
mandatory recycling requirements. In fact, there has been a slight 
decline in the State's population and the annual waste generation rate 
has remained flat at about 0.9 tons per capita since fiscal year 1993.

    Question 2. You and others imply that any windfall due to below-
market tipping fees does not accrue to taxpayers. Who then benefits--
the general find of the municipality, which uses it for other civic 
purposes? The haulers? Others?
    Response. The primary benefit is to the haulers. While some of 
these savings may be passed on to their customers, anecdotal evidence 
suggests that they are not routinely passed on. And if their customers 
are taxpayers in a municipality which is not meeting its contracted 
minimum tonnage commitment to a waste-to-energy facility, the customers 
may actually pay twice: once to the hauler for collection and again 
through their taxes to pay any municipal penalty, tax dollars which 
might have been available for other civic purposes if the 
municipality's tonnage commitment had been met.

    Question 3. At the hearing on March 18, the statement was made that 
``the sky has not fallen'' as a result of the Carbone decision. You 
have testified that Moody's has downgraded $109,340,000 in bonds issued 
to the Southeastern CT Project, and has placed an additional 
$152,840,000 in bonds issued for Bridgeport in its unstable credit 
watch category. Your testimony cites potential ``severe hardship'' for 
the municipalities. Could you elaborate on the practical impacts for 
municipalities and taxpayers of actions by financial services to 
downgrade bond ratings or place bonds in an unstable credit watch 
category?
    Response. The downgrading of municipal bonds or regional bonds 
backed by municipalities may negatively impact a municipality's overall 
credit rating and make the costs of bonding for other essential 
projects such as schools and fire houses increase. This clearly 
increases costs for both the municipalities and their taxpayers.

    Question 4. Mr. Broadway of NF1B has testified that, with flow 
control ordinances, waste generators may be forced to send their waste 
to facilities that are environmentally unsafe--rather than to 
facilities with strong environmental standards. What is your response?
    Response. The municipalities which have adopted flow control 
ordinances in the State of Connecticut are contracted to send the 
municipal solid waste generated within their borders to one of the six 
waste-to-energy facilities operating in the State. Each facility is 
fully permitted and is subject to routine inspections by the Air, Waste 
and Water Management Bureaus of the Connecticut Department of 
Environmental Protection. All of these facilities are required to meet 
applicable State and Federal environmental standards. In addition, 
these facilities are entirely consistent with the State and Federal 
waste management hierarchies which prefer waste disposal through energy 
recovery to landfilling. To suggest that Connecticut's facilities do 
not have strong environmental standards or are environmentally unsafe 
is simply untrue. Shipment of Connecticut waste to out-of-state 
facilities which Connecticut cannot regulate is more likely to result 
in environmental degradation than the continued compliant and efficient 
operation of the State's waste-to-energy facilities.

    Question 5. Can you elaborate on how flow control has supported 
environmentally sound alternatives to waste disposal (e.g., recycling, 
source reduction) in Connecticut, and the impacts of Carbone in this 
regard?
    Response. As noted in my testimony on March 18, 1997, until the 
Carbone decision, flow control ordinances adopted by Connecticut's 
municipalities were the foundation for an integrated regional system of 
solid waste management including recycling centers, transfer stations, 
waste-to-energy facilities, and landfilling of residuals. Flow control 
made it possible to construct and maintain this system by guaranteeing 
a sufficient flow of waste to the waste-to-energy facilities to assure 
that their fixed costs would be covered and that the system as a whole 
could be operated. As of fiscal year 1995, the year after the Carbone 
decision was issued, Connecticut recycled about 23% of its municipal 
solid waste, with a statutory goal of reaching 40% by the year 2000, 
sent 59% to waste-to-energy projects in State, landfilled 17% in State, 
and disposed of only 1% (38,808 tons) out-of-state. As noted above, 
since the Carbone decision, increasing amounts of Connecticut municipal 
solid waste have been being shipped out-of-state for disposal. In 
fiscal year 1996, Connecticut recycled about 23% of its municipal solid 
waste, sent 56% to waste-to-energy projects in-State, and filled 14% 
in-State, and disposed of about 7% (190,581 tons) out-of-state.
    The regional authorities which were originally formed to develop 
the waste to energy projects provided the structure for developing 
regional recycling facilities, administering regional recycling 
programs, and educating the public about source reduction. Several of 
the regional recycling programs are at least partially subsidized by 
the waste-to-energy projects. In the two largest recycling regions, 
encompassing most of the State's population, the costs of operating the 
recycling facility are incorporated into the tipping fee at the waste-
to-energy facility, thus providing municipalities and haulers with an 
incentive to recycle more and dispose less solid waste. In addition, 
inspections at the regional transfer stations and waste-to-energy 
facilities help enforce Connecticut's mandatory recycling requirements. 
When waste is shipped out of State, such enforcement is much more 
difficult. Finally, flow control ordinances for recyclables ensure that 
the recyclables go to the regional recycling facility on a regular 
basis rather than only when the market for recyclables is low. It is 
well known that recycling markets vary dramatically over time. It is 
not practical or fair for municipalities to bear the costs of providing 
and maintaining recycling facilities which are only used by haulers 
when they need to get rid of low-value recyclable materials.

    Question 6. Mr. Broadway testified that facilities with flow 
control are built to receive waste considerably in excess of waste 
volumes projected in a ``free market.'' Is this assertion an accurate 
reflection of the situation in CT?
    Response. This is not an accurate statement for Connecticut where 
the waste-to-energy facilities were built to accommodate the waste 
predicted to be generated in the State. Each of the State's six 
facilities was designed with enough guaranteed capacity to meet peak 
demand of the municipalities associated with the project. In order to 
avoid excess capacity, Connecticut's legislature passed a statute (CGS 
22a-208d) prohibiting the Department of Environmental Protection from 
issuing a permit for a new waste-to-energy facility or the expansion of 
an existing waste-to-energy facility if that new facility or expansion 
would create substantial excess capacity in the State.

    Question 7. Mr. Broadway, on behalf of the NFIB, has testified that 
flow control ordinances increase inefficiency because no incentive 
exists to improve the disposal facility, to implement new technology, 
to attempt to cut costs, or to pass any savings along to the consumer. 
What is your response?
    Response. Five of Connecticut's six waste-to-energy facilities are 
managed by public boards of directors on which municipal and State 
officials sit, and facility financial information is a matter of public 
record. These boards of directors have a great interest in system 
efficiency and operational costs because they are answerable to the 
taxpayers. Any increase in facility tipping fees in Connecticut is 
cause for considerable public debate. In addition, in many cases the 
municipalities pay the tipping fees directly. An opportunity to reduce 
the tipping fees represents an opportunity to lower municipal taxes or 
undertake other needed municipal projects.

    Question 8. Some witnesses at the March 18 hearing contended that 
flow control is monopolistic and anticompetitive. What is your response 
to these contentions?
    Response. The question in Connecticut is whether the regional solid 
waste management system is anti-competitive; and the answer is that it 
is not because five of the State's six waste-to-energy facilities and 
all of their associated recycling plants, transfer stations and 
landfills were developed by public entities using accepted public 
bidding processes. One of the major entities which helped to create 
this solid waste management system is the Connecticut Resources 
Recovery Authority which is specifically required by statute to 
contract with the private sector for all phases of design and 
implementation (CGS 22a-268). Furthermore, by Connecticut statute, the 
burden of providing for solid waste disposal rests with the 
municipalities (CGS 22a-220). Connecticut's regional, integrated solid 
waste management systems were created by groups of municipalities which 
took seriously their statutory obligation to provide safe and sanitary 
management for solid waste generated within their borders. The 
municipalities committed their municipal solid waste and their full 
faith and credit to these systems during the 1980s when landfills were 
reaching capacity and no other disposal options appeared to be 
available. Their goal was to ensure long-term and environmentally 
appropriate waste disposal through waste-to-energy projects. They were 
public entities operating appropriately in the public realm to satisfy 
their legal responsibilities. They should not now be compromised for 
reasonable decisions they made ten years ago.

    Question 9. New Jersey has five incinerators. It appears from the 
testimony of both Mr. Leff and Mr. Johnson that incinerators, not 
landfills, are in financial jeopardy because of the lack of flexibility 
and high debt spawned by flow control. As you know, many environmental 
groups are opposed to flow control because they claim that flow control 
makes viable uneconomical incinerators. Standard & Poor's seem to agree 
that those are the facilities most likely to be thrown in default by 
the loss of flow control. Do you think incinerators are just not 
economical without flow control?
    Response. Connecticut has taken the position that it should be 
responsible for managing as much of the waste generated within its 
borders as possible and that it should support the solid waste 
management hierarchy which prefers waste-to-energy disposal over 
landfilling. During the last decade no new MSW landfill has been sited 
in Connecticut due to strict State and Federal facility standards, the 
State's lack of geologically suitable sites and public opposition to 
such facilities. During the same period, six waste-to-energy facilities 
have become operational and have formed the foundation for 
Connecticut's waste disposal system. Flow control is essential to these 
waste-to-energy facilities because they require a consistent daily flow 
of waste in order to operate efficiently and generate the power 
required by their utility customers. Unlike landfills, these facilities 
cannot slow down or shut down for extended periods of time. They 
typically operate seven days a week as close to design capacity as 
possible to produce electricity for the grid. If the Fresh Kills 
landfill closure proceeds as scheduled, flow control ordinances may 
become less important for a time because there will be tremendous 
competition for any disposal capacity in the vicinity of New York City, 
but for the present, flow control is essential to preventing the export 
of Connecticut waste from the Connecticut facilities to which it is 
committed by contract.

    Question 10. Don't high cost waste-to-energy plants lead to less 
recycling with or without flow control?
    Response. Relatively high tipping fees, regardless of the type of 
disposal facility, encourage source reduction and recycling by 
providing municipalities with a beneficial way to avoid disposal costs. 
Low tipping fees have the opposite effect. Furthermore, as described in 
the response to question 5 above, recycling and waste-to-energy 
facilities in Connecticut are integrally connected through regional 
authorities, operational fee subsidies, and public education and 
enforcement efforts. With flow control, Connecticut's recycling rates 
steadily increased from 1990 through 1994. Since the Carbone decision, 
the recycling rate has remained flat at 23%. With waste flowing out-of-
state and away from their designated facilities, municipalities have 
not had an incentive to promote recycling because it would exacerbate 
their tonnage commitment shortages and potentially incur penalty 
payments. Instead they have been laying off municipal recycling 
coordinators and have been unenthusiastic about implementing volume 
based collection/disposal fees which would encourage both source 
reduction and recycling.
                                 ______
                                 
   Statement of James M. Seif, Secretary, Pennsylvania Department of 
                        Environmental Protection
    Good morning, Mr. Chairman and members of the committee. My name is 
Jim Seif and I am Secretary of the Pennsylvania Department of 
Environmental Protection (DEP). On behalf of Governor Ridge, I want to 
thank you for the opportunity to speak with you about the issue of 
unwanted municipal solid waste coming into our Commonwealth for 
disposal.
    Pennsylvania's No. 1 Federal environmental legislative priority 
this year is to see Congress pass effective legislation allowing States 
to control unwanted imports of municipal solid waste.
    While other States choose to ignore their responsibilities to take 
care of their own waste, Pennsylvania did not. We made the hard 
decisions to set up the nation's most comprehensive curbside recycling 
program and built a waste disposal infrastructure that meets the 
highest environmental standards.
    What was our reward? To see waste from other States fill up the 
disposal capacity we created by asking our citizens to recycle. And 
waste from other States goes to our landfills because other States 
refused to issue permits for landfills in their States.
    Unfortunately, the trend for municipal waste exporting is getting 
worse not better. Municipal waste imports into Pennsylvania increased 
by 1.2 million tons in 1996 to 6.6 million. Pennsylvanians generate 
about 9 million tons of waste a year.
    How bad is the problem for Pennsylvania? The Congressional Research 
Service report entitled ``Interstate Shipment of Municipal Solid Waste: 
1996 Update,'' shows Pennsylvania is the largest net importer of 
municipal waste. In fact, Pennsylvania imports over three times as much 
municipal waste as the State in second place. We receive ``nearly one-
third the national total for interstate waste shipments,'' according to 
the CRS Report.
    We have worked closely with three other major importing States--
Indiana, Michigan and Ohio--over the last 3 years to deal with the 
problem of interstate waste, and we will continue to be part of that 
bipartisan four-State coalition. Last year Governor Ridge, along with 
23 other Governors urged Congress to enact interstate waste 
legislation.
        pennsylvania's municipal waste management success story
    The Commonwealth's system for managing municipal waste has four key 
elements:
     tough standards for waste disposal and resource recovery 
facilities that are protective of human health and the environment;
     county waste planning that ensures a minimum of 10 years 
of disposal capacity;
     the largest curbside recycling program in the nation,
     a mixture of county designated flow control and free 
market concepts.
    Through the efforts of Pennsylvania's public and private sectors, 
we now have a stable solid waste infrastructure that benefits all of 
our citizens.
    We are self-sufficient and we have balanced our need to ensure 
adequate waste disposal capacity for Pennsylvania's citizens with the 
desire to preserve the rural heritage and natural beauty of William 
Penn's woods.
    It wasn't always so. In the mid-1980's Pennsylvania faced a 
municipal waste crisis. Disposal rates were increasing rapidly as 
disposal capacity was shrinking.
    At one point, Pennsylvania had only 12 to 18 months of disposal 
capacity left in the entire State. Pennsylvania's old, substandard, 
unlined landfills and town dumps--numbering over 1,100--were being shut 
down by the State because of their environmental inadequacy. And no new 
facilities were being opened because neither the private nor public 
sector was willing to invest in new disposal facilities in a State that 
had an uncertain permitting process and no comprehensive planning. As a 
result, Pennsylvania was exporting significant amounts of waste to New 
Jersey and other States.
    At the same time, there were few organized State or local 
government recycling efforts. Recycling was something left to a few 
innovative communities and the Boy Scouts and church groups at make-
shift drop-off centers in shopping malls.
    That all changed in 1988, when Pennsylvania took the first step 
toward self sufficiency by enacting the Municipal Waste Planning, 
Recycling and Waste Reduction Act (Act 101).
    The Act assigns counties the responsibility for waste planning, 
requires recycling, authorizes programs to encourage waste reduction, 
requires government to set the example and purchase products made with 
recycled content, provides funding for host municipality inspectors, 
and requires landfills and other facilities to pay host community fees. 
It also imposed new safeguards at waste management facilities in 
Pennsylvania, building on the authority given the Department in the 
Solid Waste Management Act of 1980 to set environmental protection 
standards for landfills, incinerators and other waste facilities.
    Before Act 101, there was no comprehensive waste planning done at 
any level of government in Pennsylvania. Now, all 67 counties have 
municipal waste management plans in place that review waste generation 
levels, consider currently permitted and pending municipal waste 
disposal facilities and their relative locations, and adopt strategies 
to ensure a minimum of 10 years disposal capacity. Counties have taken 
a variety of approaches to assuring future capacity, from directing 
waste to particular facilities to having a menu of disposal facilities 
available.
    As of today, Pennsylvania has 51 permitted double-lined landfills 
and 7 resource recovery incinerators. At the present rate of disposal, 
these facilities should provide disposal capacity for the next 10-15 
years. If the rapid increase of out-of-state waste continues, however, 
this hard-won disposal capacity will be taken from us.
    Pennsylvania has made tremendous strides to improve statewide 
recycling. Ten years ago, Pennsylvania had fewer than 75 curbside 
recycling programs and recycled only 2 percent of its municipal waste. 
Today Pennsylvania leads the Nation in the number of curbside recycling 
programs with 864. Combined with the 253 drop-off programs, recycling 
is now available to 8.7 million residents and businesses in 1,355 
communities, who together recycled over 2 million tons in 1996--20 
percent of Pennsylvania's municipal waste. Pennsylvania's educational 
outreach efforts have won regional, national and international acclaim, 
including a 1992 United Nations Award for excellence in communicating a 
priority issue. Last year, Pennsylvania was the host State for the 15th 
annual National Recycling Congress in Pittsburgh.
    Recycling programs at the local level are financed in part by the 
State's Recycling Fund, which is supported by a $2 per ton fee on 
municipal waste received at waste disposal facilities. To date, this 
fund has provided over $180 million to local and county governments to 
support their recycling and planning efforts. Pennsylvania has also 
provided more than $35 million in low interest loans and technology 
grants to industry to assist it in developing new recycled products.
    More than 85 Pennsylvania companies manufacture recycled products, 
and the Commonwealth leads the Northeast in the number and percentage 
of manufacturing jobs related to recycling.
    State government has also done its part to increase recycling. 
Pennsylvania has established recycling programs at all State agencies 
and has steadily increased its procurement of recycled products, which 
in turn helps to create new markets. In fiscal year 1995/96, 
Pennsylvania purchased $40 million in products containing at least 10 
percent recycled content, a 20 percent increase over the previous 
fiscal year. In 1995, 4,500 tons of materials were recycled in the 
Capitol Complex in Harrisburg.
    With regard to setting environmental standards, after working to 
close over 1,100 municipal waste dumps that were unsafe, out-dated and 
unprotective, Pennsylvania adopted new municipal waste landfill and 
resource recovery incinerator regulations that are among the toughest 
in the nation. Pennsylvania requires all municipal waste landfills to 
have double liners, leachate collection and treatment and specifically 
approves all streams of non-hazardous residual waste going to 
facilities to make sure they can handle it safely.
 unwanted municipal waste imports--``if you build it, they will come''
    One large unintended consequence of building a world class 
municipal waste infrastructure is that the amount of waste being 
imported into Pennsylvania has increased steadily and shows no sign of 
slowing down. We built it, and with no controls, they came. In 1987, 
Pennsylvania's waste imports were less than 3 million tons. Ten years 
later, Pennsylvania is importing over 6.6 million tons of waste to 
municipal waste facilities from 29 States. Exhibit 1, shows how 
dramatically our waste imports have increased--over 130 percent since 
1989.
    As import levels have risen, so too has the level of concern among 
many Pennsylvanians who fear that our State is rapidly becoming a 
dumping ground.
    Pennsylvanians' fears about increasing levels of unwanted municipal 
waste imports were greatly heightened in May of last year, when New 
York City announced that it intended to close the Fresh Kills Landfill 
in Staten Island by 2001. That will add 4.7 million tons of waste per 
year to the waste market. Governor Ridge recently expressed his 
concerns to Governor Pataki and Mayor Guiliani about their Task Force 
report which recommends continued reliance on out-of-state facilities 
to resolve New York City's trash problem.
    These concerns also can be seen in editorials and letters to the 
editor from all parts of the Commonwealth. For example, a recent 
editorial in the Scranton Tribune dated December 5, 1996 stated: ``We 
are sick of being a garbage dump for other States. Let New York State 
find a place within its borders for New York City's garbage.'' The 
Sunbury Daily Item on January 17, 1997 stated: ``It's not right that 
officials in New York solve their waste problems by shipping huge 
quantities of garbage to Pennsylvania. After all our landfills are 
limited too. If we fill them with New York's garbage, where will we 
dispose of garbage generated by Pennsylvania's 12 million people?''
    In many of our communities, while residents are willing to accept 
the burdens associated with disposing of their own trash, such as truck 
traffic, noise, odors and other nuisances, they find it simply 
unacceptable that other States appear either unwilling or unable to 
take some of the same actions we took to handle their own trash. 
Moreover, our citizens feel that all of their efforts to increase 
recycling are being lost in a sea of rising waste imports.
    Waste imports since 1988 were four times the amount of waste 
recycled by all Pennsylvanians. The total tonnage of waste recycled 
since Act 101 went into effect in 1988 is approximately 8 million tons. 
Total imports in that same time period were in excess of 32 million 
tons.
                        pennsylvania's response
    States recognize that we presently do not have the power to impose 
limits on any municipal waste being imported into the Commonwealth. In 
numerous decisions dating back to 1978, the U.S. Supreme Court has 
ruled that the transport and disposal of municipal waste is interstate 
commerce protected by the Constitution and that States do not have the 
authority to limit the flow of waste across State lines, until Congress 
grants them that authority.
    In the last 2 years in numerous letters, and on visits to 
Washington to meet with congressional leaders, Governor Ridge has asked 
Congress to give us that authority.
    In addition, responding to the concerns of their constituents, 
Pennsylvania's House and Senate passed separate resolutions in June 
1996 calling on the Congress to approve legislation authorizing states 
to restrict the amount of solid waste imported from other States 
(Exhibit 2). We expect similar actions this year.
    In January 1997, the Citizens Advisory Council to the Pennsylvania 
DEP, sent a letter to Pennsylvania's Congressional delegation urging 
them ``to work aggressively to pass Federal legislation that would 
provide an equitable framework to require each State to be responsible 
for providing capacity within its borders for the disposal of its 
citizens' waste, and giving States authority over importation of out-
of-state waste.'' (Exhibit 3).
    Despite all of our efforts, Federal interstate waste legislation 
did not make it through the last Congress.
    At this point, Pennsylvania has done all that it can do with regard 
to minimizing the impacts that municipal waste, whether generated in-
State or out-of-state, has on our communities.
    Last month, my Department released new policies in response to an 
Executive Order issued by Governor Ridge on August 29, 1996. That order 
required my Department and the Pennsylvania Department of 
Transportation to (1) evaluate all existing municipal waste landfills, 
resource recovery and transfer facilities to make sure they are not 
causing environmental or traffic safety problems; and (2) conduct a 
review of our municipal waste program to see how DEP could more 
effectively analyze new permit applications in terms of traffic 
impacts, volumes of waste accepted and their general environmental 
impact.
    With the help of DEP's Solid Waste Advisory Committee and other 
groups, the Department recently issued new policies in the following 
areas:
     Traffic Safety. DEP now has developed a more detailed 
procedure, developed in cooperation with the Department of 
Transportation, to review the potential traffic safety impacts of new 
or expanded municipal waste disposal facilities and transfer stations, 
that will be based in part on the studies done at existing facilities.
     Waste Volumes Accepted. DEP has developed a specific 
procedure to set daily volume limits on municipal waste facilities to 
reduce environmental and safety hazards.
     Environmental Assessments. DEP is now using a more 
comprehensive environmental assessment process for identifying 
community and environmental impacts such as incompatible land uses and 
impacts on other natural and cultural resources like scenic rivers and 
historic sites, as recommended by a stakeholders group that I and our 
County Commissioners Association convened to recommend improvements to 
Act 101.
    All pending and future applications for increases in disposal 
capacity or waste volumes will now be reviewed by DEP in accordance 
with the new policies and procedures developed under the Governor's 
Order.
    DEP will be working closely with host counties and host 
municipalities affected by permit applications to assess the problems 
created by proposed facilities.
    In addition to these steps, DEP, the Department of Transportation, 
State Police and the Public Utility Commission will be continuing 
random inspections of waste trucks on our Interstate highways and at 
landfills and resource recovery facilities to make sure they meet our 
safety and environmental rules. The surprise inspections we conducted 
last year resulted in citing 689 waste truck drivers for 905 
violations. A total of 2,632 waste trucks were inspected at nine 
separate locations around the State. A disproportionately large 
percentage of the violations were found to exist on trucks hauling 
waste from out-of-state. We proposed as part of our budget this year a 
new initiative that would allow communities to hire their own waste 
truck inspectors to supplement our own inspection program.
    Our inspection program complements the Operation Waste STAR (Safer 
Trucks and Roads) driver safety education program announced last year 
by the Pennsylvania Waste Industry Association. This new voluntary 
program requires participants to do a 57-point safety check of their 
truck every day it is used. The association gives trucks that pass the 
inspection a star sticker to display.
    As part of our truck inspection effort, I have notified my 
counterparts in the states that send waste to Pennsylvania of our 
inspection program and have asked them to notify waste haulers in their 
States of our initiative. In addition, I recently signed a mutual aid 
agreement with Robert Shinn, the Commissioner of New Jersey's 
Department of Environmental Protection, that commits both of our States 
to continue random independent vehicle inspections and to conduct joint 
operations with State police and other agencies.
    As I noted above, Pennsylvania believes that it has taken all the 
actions that it legally can to protect its citizens from out-of-state 
waste. But it's clearly not enough. We need congressional action, and 
we need it now more than ever.
                       what we are not asking for
    I want to make clear that Pennsylvania is not interested in turning 
our backs on the legitimate needs of our neighbors. We recognize that 
every State has its own unique set of values and needs that reflect 
fiscal and political constraints in dealing with waste issues, but we 
don't want to be thought of as the first option for disposing of waste 
from other States either.
    We are also not asking for Federal money or for more Federal 
regulations. We are simply asking for the tools we need to protect our 
communities from unreasonable amounts of unwanted municipal waste from 
other States.
                         what we are asking for
    Simply put, if the Supreme Court says that States need 
Congressional authorization to regulate the flow of trash across State 
lines, then Pennsylvanians, including the Governor, the members of our 
General Assembly, and our Citizens Advisory Council, say that it's time 
for Congress to give us that authority.
    Pennsylvania seeks to protect the fiscal, political, social and 
community investment that has been made in our solid waste 
infrastructure--an investment that has allowed us to move from ground 
zero to a world class, environmentally safe waste management system in 
less than a decade.
    We are asking Congress to give States, like Pennsylvania, the tools 
that will allow State and local governments to place reasonable limits 
on unwanted municipal waste imports. In particular, we are asking for 
authority to allow individual communities to say that they do not have 
to accept out-of-state garbage if they don't want to. There are local 
governments in Pennsylvania that have already signed host community 
agreements that specifically authorize the import of out-of-state 
garbage. These agreements should be honored. On the other hand, if the 
local government decides that it does not want waste brought in from 
other States, Congress should protect those wishes as well.
    We are looking forward to working with the committee and its staff 
to develop interstate waste legislation that does the following:
     allows States to impose a freeze on out-of-state waste at 
1993 levels
     authorizes States to reduce or ratchet down the levels of 
waste imports where there are no host community agreements
     prohibits waste imports at facilities that did not receive 
waste in 1993 until the affected local government approves its receipt
     allows States to deny a permit for disposal facilities 
based on need
     allows States to impose a percentage cap on the amount of 
waste that a new facility or major modification of an existing facility 
could receive.
    In addition to supporting controls on interstate waste, 
Pennsylvania also requests that Congress authorize the use of flow 
control ordinances to direct waste to particular waste disposal 
facilities, especially when it is needed to protect public investments. 
The issues of interstate waste and flow control have historically been 
tied together and we see no reason to break them apart. If 
Pennsylvania's neighbors, such as New Jersey, had the ability to 
enforce flow control, there would be significant benefits to the 
Commonwealth because it would help these States to keep their waste 
within their borders.
              how we will use the tools congress gives us
    I can assure you that we have no intention of using any of the new 
tools that Congress may give us to act punitively toward any State or 
community that has sent waste to Pennsylvania.
    Despite our growing alarm over the closure of Fresh Kills, we have 
continued to pursue a meaningful and constructive dialog with our 
counterparts in New York. Last July, leaders from our General Assembly, 
along with my Deputy Secretary for Special Projects met with New York 
State environmental officials and legislators in Albany to try to build 
a consensus between the importing and exporting States on Federal 
legislation. Governor Ridge and Governor Pataki have discussed the 
issue. I believe mutually acceptable legislation can be enacted.
    While we are grateful that the Senate is moving forward, we 
continue to be concerned about the inability of the House to move a 
bill. The Senate passed S. 534 not once, but twice, in the last 
Congress but the House failed to follow your lead.
    The Pennsylvania experience--this 10-year successful effort--need 
not be unique; others can do it too. But if the lesson of that success 
is simply that any State in the lead gets to be a safety valve for 
others lagging behind, if it reduces others' incentives to even make 
the effort, and if Congress looks the other way, no other success 
stories can be told. Worse yet, Pennsylvania will bear the costs of 
others' failures.
    We are happy to work with the committee to build consensus and to 
help get a bill that can be signed into law at the earliest possible 
date.
    Thank you.

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 Responses by James M. Seif to Additional Questions from Senator Chafee
    Question 1. Do you have any estimates of how much Fresh Kills waste 
you are likely to receive?
    Response. In 1996, New York exported 3,273,000 tons of waste to 
municipal waste facilities in Pennsylvania. This was an increase of 
521,000 tons over 1995. Since most of this waste comes from New York 
City there is a reasonable expectation that the amount of waste will 
increase again when Fresh Kills closes. The exact number of tons will 
depend on which companies are successful in obtaining hauling contracts 
with the City.

    Question 2. I believe we should tread lightly when we legislate to 
restrict the free flow of commerce. Some importing States claim they 
need a presumptive ban--that in the absence of State and local action, 
borders should be closed. Why is it not sufficient for the States to 
have the right to say ``no'', as we agreed twice last year in our 
interstate waste bill?
    Response. Pennsylvania has agreed with legislation proposed under 
which host municipal agreements would be the basis for any presumptive 
ban. Most importing facilities in Pennsylvania have agreements with 
their host municipalities, so the effect of a presumptive ban in 
Pennsylvania would be to limit waste not to close the borders.

    Question 3. If someone, not a governmental body, builds a properly 
permitted landfill in your State and then the State limits the 
landfills' ``customers'' by limiting out-of-state trash that can go to 
that landfill, what arguments would Pennsylvania make to a claim that 
restricting the market is a governmental taking under the Fifth 
Amendment?
    Response. A limitation upon the use of private property in the 
manner suggested in the question does not effect a taking if it 
substantially advances legitimate State interests, Lucas v. South 
Carolina Coastal Commission 505 U.S. 1003, 1023-1024, 112 S.Ct. 2886, 
2897 (1992), citing Nolan v. California Coastal Comm'n, 483 U.S. 825, 
834, 107 S. Ct. 3141, 3147 (1987), or stated another way, if it is 
imposed under the police power to protect the public health, safety and 
welfare. Lucas, 505 U.S. at 1023, 112 S.Ct. at 2897; Keystone 
Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470, 488, 107 S.Ct. 
1232, 1243 (1987). The exception to this rule is when the limitation 
denies the property owner of all of the economically viable use of his 
land not otherwise inherently proscribed in the title to the property. 
Lucas, 505 U.S. at 1019, at 1247, citing Agins v. Tiburon, 447 U.S. 
255, 260, 100 S.Ct. 2138,2141(1980)
    In analyzing whether a property owner has been deprived of all of 
the economically viable use of his land, the courts do not look at 
individual ``strands'' of rights of property ownership, but at the 
entire ``bundle'' of rights. Keystone, 480 U.S. at 499, 107 S.Ct. at 
1248, citing Andrus v. Allard, 444 U.S. 51, 100 S.Ct. 318 (1979). The 
United States Supreme Court held, for instance, that a mine owner who 
claimed it could not extract 2 percent of the coal from its mines 
because of Pennsylvania's Subsidence Act did not suffer a compensable 
taking because significant amounts of coal could still be mined. 
Keystone, 480 U.S. at 499, 107 S.Ct. at 1249.
    Limiting one source of a landfill's potential customers would not 
deny the landowner the economically viable use of its land. Other 
customers, waste types, and land uses would still be available. There 
are a significant number of potential customers within Pennsylvania: 
Pennsylvanians alone generate approximately 9.5 million tons of waste 
per year. A landfill operator could compete for these customers. 
Additionally, more than just municipal waste may be accepted by a 
municipal waste landfill. In particular, residual waste may be 
accepted. Pennsylvanians generate approximately 54 million tons of 
residual waste per year for which the landfill operator could compete. 
In the unlikely event that an operator could not find any other 
customers in these ways, it could put the land to other uses. The 
property upon which a landfill is located is generally larger than the 
area permitted for use as a landfill, and the area permitted for use as 
a landfill is generally larger than the area actually used as a 
landfill. Hence, economic viability of the entire ``bundle'' of rights 
would not realistically be denied the land owner.
    Consequently, limiting a landfill's customers by limiting out-of-
state waste that can go to a landfill would not be a governmental 
taking under the Fifth Amendment.

    Question 4. If we gave the same rights that Pennsylvania wants to 
keep out garbage to Nevada, to keep out nuclear waste, what would your 
State do with its nuclear wastes?
    Response. The comparison of municipal waste to nuclear waste 
assumes that the availability of geologic formations suitable for the 
disposal of nuclear waste is as universal among the States as the 
geologic formations suitable for the disposal of municipal waste. 
Virtually every State in the United States has geologic formations 
which, with the right design criteria, can support the disposal of 
municipal waste. Unfortunately, this is not true for nuclear waste. 
Lack of proper, convenient disposal has led to the storage of nuclear 
wastes onsite at a number of sites in a number of States. Pennsylvania 
is involved in a project with the goal of siting a low-level nuclear 
site that will be used by other States, but this has never been part of 
our municipal waste analysis.
                                 ______
                                 
   Statement of John P. Cahill, Acting Commissioner, New York State 
                Department of Environmental Conservation
    Chairman Chafee and members of the Senate Environment and Public 
Works Committee, thank you for providing me with the opportunity to 
testify on behalf of the State of New York. I appreciate greatly the 
opportunity that you have afforded me to present the State's viewpoint 
on flow control and interstate waste issues.
    I also wanted to take the opportunity to introduce myself. Governor 
Pataki appointed me as the Acting Commissioner of the Department of 
Environmental Conservation on January 1, 1997. The Governor has charged 
me with the protection of New York State's environment, balanced with 
the need to develop the State's economy. This is a challenge that I am 
undertaking enthusiastically.
                      new york state's commitment
    Senator Chafee, flow control and interstate waste issues are of 
great importance to New York State. I appreciate the committee's 
invitation to provide New York's perspective during your decision-
making process.
    New York State has an unparalleled commitment to the reduction, 
reuse and recycling of solid waste generated within the State's 
borders. New York's Environmental Conservation Law establishes a 
hierarchy which prioritizes waste reduction, reuse and recycling 
methods of solid waste management, forming the basis for the State's 
solid waste management efforts.
    In New York State, the Solid Waste Management Act of 1988 helped 
turn the tide of solid waste management in the State by including a 
comprehensive scope of requirements, programs and policies for State 
and local governments to follow in the management of solid waste. It 
established a Bureau of Waste Reduction and Recycling and a State Solid 
Waste Management Board; defined local planning units; authorized grant 
programs for planning, recycling, and local resource reuse and 
recovery; and set up a State technical assistance program. Most 
important, it set forth the State's waste management hierarchy: waste 
reduction, reuse/recycling, resource recovery, and landfilling. This 
statute created a fundamental change in the way municipalities viewed, 
and now implement, solid waste management.
    In New York State, the recycling of solid waste materials has 
increased from approximately 2.0 million tons in 1988 to over 8.5 
million tons in 1994. This level is continuing to increase. The 
Environmental Protection Fund, created by New York State in 1993, 
demonstrates our commitment to implementing the State mandated solid 
waste hierarchy by providing funds annually for a variety of local 
waste reduction and recycling activities.
    In fact, New York has a recycling record of which we justifiably 
can be proud. As Governor Pataki recently noted in a Natural Resources 
Defense Council article, New York has achieved a recycling rate of 
35%--well above the national rate of 24%, and above the U.S. 
Environmental Protection Agency's expectations. And the Governor is 
committed to even greater recycling in coming years through State 
support of local recycling efforts.
    However, New York faces the same challenge as States throughout the 
country, where some solid waste must still be incinerated for energy 
recovery or landfilled. And New York State, acting through its local 
governments, has made every effort to responsibly handle this residual 
solid waste within our own borders.
    Approximately 80 percent of the waste that is not recycled is 
disposed of within the State. The remaining 20 percent (approximately 
4.0 million tons) is exported to facilities in other States. Privately 
owned and operated facilities, many with host community agreements, 
manage the majority of this waste stream. The remainder is handled by 
municipalities, which use the disposal fees collected from New York to 
reduce the burden on their own taxpayers.
    Since the mid-1980s, New York has been actively closing 
environmentally unsound landfills. Their threat to public health and 
the environment could no longer be ignored. In their place, 
municipalities were developing new, environmentally sound facilities. 
Recognizing its responsibility to assist municipalities with the costs 
of landfill closures, New York State first created the Environmental 
Protection Fund that I mentioned earlier, to help fund closure costs. 
Recognizing that this $100 million a year fund--which finances other 
environmental activities, including waste reduction and recycling--
could not adequately address the State's share of all local needs for 
landfill closure funds, Governor Pataki advanced, and the voters 
approved, a Clean Water/Clean Air Bond Act that provides an additional 
$50 million in landfill closure grants to local governments. Between 
these two funding sources, we believe that the State will provide 
sufficient funds to local governments to ensure that all landfills that 
must be closed, will be closed.
    Loss of flow control, as I will discuss below, is presenting a 
major obstacle to our waste management structure. The financial 
assistance that the State can provide, cannot absorb or provide relief 
for the localities in New York State that already have incurred 
substantial debt because they believed that flow control was a legally 
and financially sound mechanism. Congressional action, I believe, is 
our only avenue to help New York's municipalities once again to be 
self-supporting with respect to the financial mechanisms needed to 
properly manage their waste streams.
                              flow control
    Local governments in New York, like those in other States, faced 
serious financial consequences as a result of the C&A Carbone v. Town 
of Clarkstown U.S. Supreme Court decision in 1994. Prior to this 
decision, over a billion dollars in local debt had been issued for the 
planning, design and construction of environmentally sound landfills 
and waste-to-energy facilities in New York State. The State has 
supported and assisted our local governments to meet their financial 
obligations since the Supreme Court struck down these flow control 
ordinances. To do so has been a great challenge.
    The State of New York has had a history of municipal development 
and operation of solid waste disposal facilities, in contrast to most 
other States, where private landfills have served communities. As 
attention to the environmental impacts of solid waste disposal grew, 
the costs of developing such facilities skyrocketed. Added to that was 
the obligation of our municipalities to provide for waste reduction and 
recycling efforts--our law puts that burden on local government, not 
private entities. This situation led to the need for flow control in 
order to create economically viable and environmentally sound solid 
waste management systems that, through bond financing, State 
assistance, and local funds, provided everything from education to 
recycling to final disposal. The costs of such systems, as you are well 
aware, are substantial. The loss of flow control represented a major 
change in direction for New York's system.
    Nearly three years after the Carbone decision, assistance from 
Congress is still urgently needed to help New York State's communities 
cope with the financial and environmental responsibilities of proper 
solid waste disposal. Restitution of flow control in municipalities 
which previously had it would provide assurance to bond counsels and 
relief to local governments. It would bring a substantial portion of 
our current exports back into New York, where full-service municipal 
facilities have found themselves at an economic disadvantage against 
private enterprise with respect to tipping fees. In addition, it would 
help New York avoid future problems with solid waste disposal that may 
affect other States, and would assure increased investment by 
municipalities in waste reduction and recycling efforts.
    The Carbone decision resulted in the exportation of approximately 
an additional one million tons annually of municipal solid waste 
generated in New York State, and a shift in disposal from local, 
municipally owned facilities to more competitive private facilities 
that did not bear the municipalities' burden of costs and thus, could 
afford lower tipping fees. If flow control is re-instituted for those 
communities that initially had it, localities can once again manage 
solid waste within their own borders at more competitive tipping fees.
    While flow control legislation is important to New York, I wish to 
direct the majority of my comments to an even more sensitive issue, the 
exportation of solid waste from New York State, particularly New York 
City, and how it relates to the recent agreement between the City and 
the State to close the Fresh Kills Landfill. Although some private 
carters or municipalities elsewhere in New York State are responsible 
for a portion of our exports, we recognize that the primary concern of 
other States, and their Congressional representatives, has been the 
exportation of commercially generated solid waste from New York City. 
With the closure of Fresh Kills, residentially generated solid waste 
will be added to this mix of exports.
         new york city's new approach to solid waste management
    Last June, Governor Pataki, along with Mayor Guiliani and the New 
York State Legislature, made a commitment to close this country's 
largest landfill by January 1, 2002--a decision that was long overdue. 
Fresh Kills has a lengthy history. It was built in 1948 upon 
environmentally fragile marine wetlands. When opened, it covered 1,500 
acres, and was not intended to go higher than the surrounding grade 
level, and was expected to be in use for only a few years. Instead, 
after 48 years, it has grown to 2,200 acres with heights approaching 
200 feet. The Fresh Kills Landfill, due to its longstanding 
inadequacies, has contributed to the degradation of air and water 
quality; and its construction preceded State requirements to line 
landfills. Let me make this clear: the problem with Fresh Kills was not 
the waste going into the facility; rather, it was the facility itself.
    On top of the commitments made to assist municipalities across New 
York State, the Clean Water/Clean Air Bond Act earmarks $75 million to 
assist New York City with the environmentally sound closure of the 
Fresh Kills Landfill. While it is unquestioned that there will be major 
public health and environmental benefits from closing the Fresh Kills 
Landfill, some people still ask: why let the City close its only 
remaining landfill? The answer is simple. Every day that the City 
continues to dispose of waste at Fresh Kills prolongs the pollution of 
Staten Island and the surrounding waters of New York Harbor, and delays 
the implementation of more effective waste reduction, recycling and 
waste disposal strategies.
    In less than a year, we've seen a task force of State, City, 
Federal and environmental interests convened by Governor Pataki and 
Mayor Guiliani unanimously release a report pledging to implement 
dozens of proposals for replacing Fresh Kills. Since the Task Force 
report was released last November, New York City already has begun to 
refocus and expand its recycling and waste reduction programs, adopting 
each and every recommendation of the Task Force, with budgetary and 
staff commitments to back it up. Junk mail, mixed paper and bulk metals 
are being added to the City's existing recycling program, and the City, 
with guidance from the State, is preparing over a dozen pilot programs 
and other field-oriented studies that will shape another round of waste 
reduction and recycling program improvements in early 1998.
    Governor Pataki and Mayor Guiliani also have stressed the need to 
encourage growth in the recycling industry, to strengthen recycling's 
cost effectiveness and the overall economy of the metropolitan area. 
Successful corporate recruitment efforts such as the Visy Paper 
recycled cardboard plant recently constructed on Staten Island will 
enable recycling to play an increasing role in future waste management 
plans. When the Visy plant goes on line this June, it will create a 
market for paper the City previously could only have dreamed of, and 
will provide 400 permanent jobs.
    The State also has provided economic development assistance to New 
York City's local development corporations and private entities, to 
facilitate the development of new waste reduction and recycling 
techniques. We firmly believe that, in the future, other large cities 
will look to New York for advice and assistance on innovative 
recycling, composting and waste reduction efforts.
    To allow for an orderly transition away from dependence on Fresh 
Kills, the City will decrease the tonnage of solid waste going to the 
Landfill steadily, year by year, until it reaches zero at the end of 
2001. The remaining amount of trash that has not been captured by waste 
reduction and recycling initiatives, the City will send to 
environmentally sound disposal facilities operating with the agreement 
of the surrounding community.
    In fact, the Fresh Kills Task Force Report contains an essential 
commitment of the City: to dispose only at permitted landfills that 
have entered into ``host community'' agreements signifying the 
acceptance of the facility by the community involved. The inclusion of 
this commitment by the City was crucial to our neighboring States and 
New York's other communities. Governor Pataki views these commitments 
as fundamental to preserving the fairness of the Fresh Kills closure 
process.
                     clean water/clean air bond act
    The State believes that it must assist the City in these efforts. 
For that reason, when Governor Pataki proposed the Clean Water/Clean 
Air Bond Act in 1996, he included in it $100 million for City solid 
waste management. As I mentioned earlier, $75 million is provided to 
help the City finance the closure of the Fresh Kills Landfill, and $25 
million is available for capital costs of waste reduction and recycling 
projects, the largest single recycling commitment ever made in the 
State. The voters of the State approved this commitment, demonstrating 
their strong support for responsible solid waste management in New York 
City. In addition, $19 million in 1972 Environmental Quality Bond Act 
aid has been converted to make it available for further recycling 
grants. Finally, the State's Environmental Protection Fund provides an 
annual funding stream for solid waste projects across the State, 
including such important efforts as public education and outreach.
                          solid waste exports
    Governor Pataki recognizes the importance of State assistance to 
ensuring that local governments, including New York City, meet the 
State's solid waste hierarchy. Financial support is only one means of 
assistance. The Governor is working in partnership with New York City 
to develop appropriate solid waste management techniques while we work 
towards the post-Fresh Kills era.
    My agency, the New York State Department of Environmental 
Conservation, works closely with City officials on a daily basis to 
determine the most appropriate means to manage the City's waste flow.
    Even with these waste reduction and recycling initiatives and the 
financial commitments of the State, New York recognizes the unfortunate 
necessity to export a portion of the residential solid waste collected 
by New York City that would otherwise have been disposed at the Fresh 
Kills landfill. The commercially generated waste from New York is 
already disposed of separately, often going to facilities in other 
States.
    New York State understands the burden other States are bearing, and 
is willing to work toward limitations on our waste exports, provided 
they are accomplished in a predictable, reasoned fashion. We can 
support legislation that will provide a reasoned, predictable 
framework, without which private developers are unwilling to make long-
term investments to assist in our disposal needs. This includes no 
presumptive ban against interstate waste shipments, and upholding 
willing host community agreements.
    In addition to our support for such a measure, I want to point out 
that New York has, and will continue to, take action to develop new 
disposal capacity in State--not only to assist New York City, but also 
other local governments in this State. Our efforts to develop new 
capacity include:
     In its 1993 amendments to its solid waste management 
regulations, DEC modified its landfill siting requirements to allow 
more flexibility in how the landfill siting process will be conducted. 
Rather than require applicants to evaluate numerous alternative 
locations to find the most appropriate site, specific siting criteria 
were added that are adequate for the protection of both human health 
and the environment, making it more feasible to locate landfill sites 
in the State. DEC believes that this approach to siting will result in 
significant reductions in the amount of time and money necessary to 
site a landfill.
     During 1995 and 1996, DEC issued permits for the 
construction of approximately 50 million tons of additional landfill 
capacity. In addition, several major new landfill projects and 
expansions are being pursued presently by the public and private 
sector.
     In late 1994, the Onondaga County Resource Recovery 
Agency's Waste to Energy Facility commenced operations, thereby 
eliminating exports of solid waste from the Syracuse area to other 
States.
    New York is making every effort to ensure, first and foremost, that 
solid waste is reduced, reused or recycled instead of becoming a waste 
product. Every effort is being taken to dispose of waste in-State. 
Finally, where waste exports remain a necessity, we are willing to 
commit to reasonable restrictions that do not include a presumptive ban 
on interstate waste transports.
    Again, please bear in mind that waste exported from New York State 
is sent primarily to willing host communities. This issue is of 
paramount importance to the State. We believe that our waste exports 
should be sent only to those communities willing to receive it, and are 
willing to work with interested municipalities to develop these 
agreements. To exemplify this commitment, New York City and the State 
have made the commitment to require any facility accepting residential 
solid waste exported by the City to have a host community benefit 
agreement in place.
    Senator Chafee, I want to express to you and the other members of 
the committee my personal willingness to work with you on flow control/
interstate waste legislation. I want to thank you, not only for the 
time you have allotted me today, but also for your willingness to 
listen to New York's needs in the past, and today, on this issue.

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Statement of Randy M. Mastro, Deputy Mayor for Operations for the City 
                              of New York
    Mr. Chairman, Senator Baucus, Senator Moynihan, and members of the 
committee, my name is Randy Mastro and I am New York City's Deputy 
Mayor for Operations. With me today is John Doherty, Commissioner of 
the City's Department of Sanitation.
    On behalf of Mayor Giuliani, I am pleased to have this opportunity 
to address this committee on an issue so important to New York City's 
day-to-day operations: the interstate transport of solid waste. I 
understand that the decision by Mayor Giuliani and Governor Pataki to 
close the City's Fresh Kills Landfill has prompted some to question 
whether Congress should revisit limiting the transport of municipal 
solid waste across State lines.
    The Congressional debate surrounding waste export long preceded the 
City's decision to close Fresh Kills. It would, therefore, not be fair 
to cite the closure of Fresh Kills as reason for the passage of 
interstate waste legislation.
    The decision to close Fresh Kills by December 31, 2001 merely 
expedites the City's plan to embark on a new, more environmentally 
sound course, in the management of its solid waste. We want this 
committee to know that we will do so responsibly and appropriately, 
with due respect for our neighbors.
    Through export of the City's residential waste, we are seeking 
nothing more than the ability to exercise the right that has already 
been exercised by cities and States across the country--responsible, 
efficient and environmentally sound solid waste management through the 
private sector. Municipal solid waste is a commodity in interstate 
commerce. The proposed business partnerships arising from NYC's waste 
export will benefit importer and exporter alike. Clearly, there are 
many other jurisdictions which share our approach, since 47 of the 50 
States actually export waste, and 45 States are importers.
    As a result, many jurisdictions already require the execution of 
Host Community Agreements before exported waste can be received. The 
Fresh Kills closure plan recognizes the importance of such agreements. 
It requires that our municipal solid waste be disposed of only at Host 
Community Agreement sites. There seems to be no need for legislation to 
require us to do that which we already require of ourselves.
    Although the closure of Fresh Kills affects only the City's 
residential waste, the private market is as essential to the management 
of that waste as it is to commercial waste. Commercial waste has been 
exported from New York City by the private sector for several years. 
For many communities and States, solid waste is an important revenue 
stream. We believe that each local community should have the right to 
accept or reject the disposal of solid waste--not by Federal 
legislation but by locally-decided Host Community Agreements.
    In developing Host Community Agreements, importing communities will 
negotiate benefits most suited to their needs. At the same time 
exporting communities will rely on private-sector bidding to select the 
vendor offering the best overall price. Clearly, senders and receivers 
will enter into business arrangements that are in their own best 
interest.
    In keeping with these principles, New York City has not pre-
determined where its solid waste will be disposed. Instead, the City 
has taken steps to assure that each bidder have all requisite 
environmental permits and a Host Community Agreement verifying that the 
receiving jurisdiction has approved the operation of the facility and 
agreed to accept the solid waste to be imported, often resulting in a 
direct financial benefit to the receiving jurisdiction. Further, the 
existing authority of States in permitting solid waste facilities in 
accordance with accepted regulatory mandates and local zoning 
ordinances, suggests that there is less reason for intervention in the 
form of Federal export restriction legislation.
    When the Mayor and the Governor decided to close the Fresh Kills 
Landfill by December 31, 2001, a commitment was made to stop shipping 
garbage to Fresh Kills by that date. There will be a phased-in 
diminution of landfilling at Fresh Kills. The City will begin with the 
export of up to 1800 tons per day of residential waste from the borough 
of the Bronx by July 1997. The City has received 6 competitive bids for 
this waste. The bidders propose seven different end destinations in 
five different States. Two of those seven sites are within the State of 
New York. The bidders, in combination, offered three times the capacity 
needed for this wastestream. It is encouraging that the bids include 
disposal sites within the State. We will urge the State to develop even 
more capacity, in part because transportation is a major element of the 
export cost.
    Once again, it is private sector demand that will shape the future 
availability of disposal sites. Indeed, according to a recent article 
in the New York Times, officials from New Jersey and Connecticut have 
said that they would welcome New York's waste because it makes good 
economic sense. Robert E. Wright, president of the Connecticut Resource 
Recovery Authority, which oversees and partially owns incinerators in 
the State, told the New York Times: ``I guess we probably have a more 
favorable eye on New York than some more distant States.'' The New York 
Times further reported: ``In New Jersey where counties have spent 
millions of dollars to build incinerators, local officials generally 
are eager for any guaranteed flow of trash. If anything, imported 
garbage at a plant like the Newark incinerator's is more desirable than 
local trash because the city gets a 10 percent share of the fee 
charged.''
    The cost of building environmentally-sound disposal sites, and 
ensuring their compliance with EPA standards, has fostered the creation 
of large, well-run, state-of-the-art regional facilities. These 
facilities typically are efficient and offer a favorable disposal cost 
structure. Cost and efficiency will continue to drive the private 
sector. And the free market will continue to serve those communities 
willing to accept a disposal facility in exchange for some host 
benefit, such as revenue, lower taxes, and even lower local disposal 
fees.
    New York City will enter the private disposal market in a 
responsible manner, armed with the benefits already derived from an 
ambitious recycling program. We are the only large city in America that 
requires 100% of its households to recycle, including those residents 
in multi-family dwellings, and we recycle a higher percentage of 
household waste than any other large city in America. Nevertheless, we 
are going to do even more. In the City's recent financial plan, the 
Mayor has included over $76 million additional dollars for the 
expansion of recycling programs, including new materials, increased 
education and outreach, consultant review of initiatives that might 
foster better compliance, new equipment to improve recycling 
efficiency, increased enforcement as appropriate, and residential 
backyard composting aimed at reducing the waste that is generated.
    This year alone, with new initiatives tied to Fresh Kills closure, 
the City expects to increase recycling by 350-700 tons per day. 
Including construction and demolition debris, the City currently 
recycles more than 4,000 tons per day or 26% of its wastestream. Thus, 
with these new recycling initiatives we aim to increase our recycling 
program by nearly 20%.
    Moreover, we are aggressively pursuing waste reduction strategies 
to reduce the daily tonnages of waste by 50-100 tons per day by the end 
of this year. For example, the Mayor recently issued a directive to all 
city agencies to reduce the waste generated and to establish 
measurement indicators by which the agencies will be held accountable.
    New York City residents are huge consumers of goods manufactured 
and shipped from other States. And the waste generated by packaging 
materials is significant. For that reason, Federal legislation limiting 
packaging or requiring manufacturers to use some percentage of recycled 
content in their packaging material would have a tremendous--and 
measurable--impact on the quantity of exported solid waste. However, 
despite our best efforts at waste reduction and recycling, a 
substantial portion of our waste will still require disposal outside 
the City.
    It is our expectation that by advancing waste reduction and 
recycling initiatives over the next five years, the City will reduce 
the amount of export. We are confident that the capacity and desire to 
accommodate this waste exists, and I reiterate that our City's 
residential waste will only be sent to communities that have agreed to 
receive it through Host Community Agreements.
    Again, on behalf of Mayor Giuliani, I would like to express my 
appreciation for this opportunity to explain New York City's position 
and to underscore our interest in continuing to work with the committee 
and its staff on solid waste management legislation. New York City and 
New York State have decided to close the Fresh Kills Landfill by 
December 31, 2001. We will implement that decision in accordance with 
all environmental regulations and in a responsible and appropriate 
manner, with due respect to our neighbors. By requiring Host Community 
Agreements, we believe that we will accomplish that aim.
    I and Commissioner Doherty will be happy to answer any questions 
you may have. Thank you.

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 Statement of David L. Olson, Western Organization of Resource Councils
    My name is David L. Olson. My family and I operate a family grain 
farm south of Minot, North Dakota. I'm here to testify on behalf of 
myself and my community, and as a member and officer of the Souris 
Valley Chapter of Dakota Resource Council, one of six citizen groups 
that make up the Western Organization of Resource Councils.
    My expertise on the interstate transportation of solid waste comes 
from my observation of the effects it has had on my community. I live 
just a few miles from the Echo Mountain Landfill, operated by Municipal 
Services Corporation (MSC), a subsidiary of Laidlaw. It receives the 
largest amount of out-of-state waste of any North Dakota landfill.
    Since the early 1990's, I have been able to witness daily the 
transporting of tons of out-of-state waste being off loaded from the 
rail-head at Sawyer, and then trucked to and dumped at the Echo 
Mountain dump. The waste dumped at Sawyer includes municipal solid 
waste and industrial waste from many different States around the 
country, as well as Mexico and Canada. The Sawyer dump receives an 
average of 405 tons of waste in one day, or 150,000 tons a year. That's 
30% of the amount of waste that the entire State generates in a year, 
and it's 30% more than the amount of waste the entire State of North 
Dakota manages to recycle in a year.
    In spite of the fact that many North Dakotans had strong 
reservations about the wisdom of siting the Echo Mountain facility in 
the old coal spoils south of Sawyer, the lack of Federal legislation 
allowing States and local governments to control the flow of out-of-
state waste into their landfills made it very difficult to prevent 
unwanted garbage from coming into our community. We were successful in 
securing construction modifications that offered additional protection 
to our water supplies. We were also able to require the presence of a 
full-time on-site inspector at the facility. But we lacked the 
necessary tools to be able to make the most fundamentally important 
decision: Did we want a mega-dump facility in our community or not?
    Since the facility was sited, those very things occurred which many 
of us predicted, including illegal disposal of hazardous waste and 
failure to produce economic development.
    From the beginning, MSC assured the local community and the entire 
State that its site was never intended as, nor would it become a 
hazardous waste site. MSC officials testified here at the Capitol and 
promised that they understood and would strictly abide by North Dakota 
Health Department regulations, especially those pertaining to hazardous 
waste.
    Furthermore, they stated that all customers of theirs, the 
generators of waste would know of MSC's compliance with all North 
Dakota Health Department laws. Unfortunately, this did not hold true.
    In late 1995, we learned that MSC had, in fact, allowed 
approximately 198 barrels of hazardous waste to be buried. The waste 
contained levels of barium several times higher than allowed by law. 
General Motors was the generator of the waste identified as hazardous, 
which was contained in metal barrels. When the Health Department 
discovered the barium, they informed GM the barrels would have to go. 
Of course GM maintained the barrels would be too expensive to dig up, 
and tried to avoid compliance with the law. GM also claimed the site in 
question was ``almost'' a hazardous waste site because of its 
construction characteristics. The waste in question remained in the 
ground as months and months of negotiation went on between GM, MSC, 
private citizens and the Health Department. To its credit GM did 
finally agree to a modified removal, removing some, but not all of the 
barrels of barium. GM and MSC both paid fines for their illegal 
activities, and GM made an additional voluntary contribution to the 
State's university system.
    Less that three months after this situation was resolved, GM 
announced it was ending its contract with MSC. Subsequently, MSC has 
also lost its major contract for incinerator ash. There are now only 
six employees at the facility. Employees may decline even further as 
cells close. Needless to say, the vast economic benefit to the 
community that MSC predicted in its promotional materials never came to 
pass, and it appears slim it ever will.
    Area land owners like myself got together early in the 1990's and 
speculation was rampant as to how a mega-facility like the Sawyer dump 
would affect all of us in the area and how it would affect the State as 
a whole? North Dakotans are a fairly pragmatic people. We were 
interested enough to contact other States where MSC's parent company 
conducted business. We contacted health and environmental departments 
in some of those States. Since North Dakota was new at the mega-dump 
business we wanted to try to help ward off for North Dakota, waste 
disposal problems that other States already encountered.
    A couple of strongly needed things came out of our research and 
practical experience. The interstate waste bills that the Senate has 
passed in the past are a start, but there are three additional points 
that I urge you to consider. Most of these points are addressed in the 
Interstate Waste bills that Senator Baucus and Senator Conrad have 
introduced, and I urge you to refer to them.
    First, there is a strong need for North Dakota and other States to 
have a ``presumptive ban,'' like the one in Senator Baucus' bill. This 
would ban imports unless the government of the host community okayed 
the shipments by signing a ``host community agreement'' with the waste 
company. Perhaps the most frustrating aspect of our experience with MSC 
was that we did not have the right to decide whether they could come to 
the community or not. We will not have that right in the future unless 
the bill that you pass includes a ``presumptive ban.'' Without it, we 
are forced to rely on the governor to honor our wishes to stop an 
unwanted mega-dump.
    Second, you realize that these huge facilities impact so much more 
than lust the host community. A State should be given authority to 
control mega-landfills. One way to do this, which we endorse, is to let 
States use a ``permit cap'' to moderate out-of-state waste shipments by 
requiring that a portion of every landfill's capacity be reserved for 
use by the host State. As more and more landfills close, every State 
will be looking for space to dispose of its own waste, both today, and 
in the years to come. A ``permit cap'' will help ensure that the host 
State's needs are met.
    Finally, in the past some waste companies and States have wanted to 
exempt incinerator ash from this legislation. Common sense dictates no 
one would argue that waste that is shredded or compacted should be 
exempted from this bill so why should incinerated waste be exempted? 
Most ash goes to the same landfills as solid waste. We think it should 
be covered by the same laws.
    In closing, perhaps the most frustrating aspect of our experience 
with MSC was that we did not have any right what-so-ever to decide if 
they should come to the community or not. Since the courts have ruled 
that hauling of garbage between States is a form of interstate 
commerce, only Congress can give us the right to decide for ourselves 
next time whether garbage disposal is the kind of economic development 
we want to try. It is certainly not my intent, or the intent of our 
organization, to block the siting of out-of-state waste facilities in 
communities where citizens can make that determination through 
democratic channels. But we do firmly believe that communities need and 
deserve the right to control their own destinies and make their own 
decisions whether to say yes or no when a multi-national corporation 
approaches them to host an out-of-state waste facility. Thank you.
                                 ______
                                 
                                   Dakota Resource Council,
                                       Dickinson, ND, June 3, 1997.
Hon. John Chafee and Max Baucus,
U.S. Senate, Washington, DC.
    Dear Senator Chafee and Senator Baucus: Thank you for the 
opportunity to respond to your questions about interstate 
transportation of solid waste. I apologize for not getting back to you 
sooner, but we are in the middle of planting season, which is a very 
busy time on our farm.
    I understand that Senator Chafee is beginning the process of 
drafting interstate waste legislation. I appreciate that you have both 
made this legislation a priority for your committee, and hope that you 
will schedule action soon.
    I am unable to respond to Senator Boxer's questions because I have 
no experience with flow control, and because Dakota Resource Council 
and the Western Organization of Resource Councils have no position on 
it.
    In response to Senator Chafee's question, the reason why last 
year's Senate Interstate Waste bill, S. 534, would not protect rural 
communities like mine is twofold. First, it would not, as you suggest, 
clearly give communities the right to say ``no''. What it would give us 
is the ability to request that a Governor say ``no.'' While I hope that 
most governors would respect the wishes of the host community, keeping 
this authority one step removed from local officials brings a potential 
for abuse that is unacceptable to rural citizens. The responsibility of 
deciding to import waste must rest as close to the affected citizens as 
possible--in the hands of local officials.
    My greater concern, however, is not which level of government is 
given the right to say ``no,'' but process by which the decision to 
import or not is made. My experience is that it is extremely difficult 
for concerned citizens to find out what is going on in time to 
influence the decisionmaking process. S. 534 would do little to change 
this.
    As I testified before your committee in March, my neighbors and I 
did not find out about the landfill that was proposed in our town until 
local officials and property owners had been approached by the waste 
company and given their endorsement to the project. The decision was 
all but final before we knew the first thing about it. The company 
still had to go through the State permitting process, but local 
opposition to the landfill was countered by support from our 
representatives.
    Please don't suggest as an alternative that we exercise our right 
as citizens of a democracy to recall and replace officials whose 
actions we disagree with. This option is unsatisfying and ineffective. 
We have replaced several of these people with individuals who better 
represent our concerns, but the damage has been done. The permits have 
been granted, the landfill is here, and it will remain there forever. 
(This word has special meaning to those of us in family agriculture.) 
Perhaps we should have foreseen a situation like this and elected 
people who could resist the waste company's promises of jobs and taxes, 
but none of us can predict the future, and I've met few officials who 
can walk away from promises of economic development being pitched by 
professionals.
    What we need is a process that levels the playing field as much as 
possible. Citizens should be informed and given the opportunity to 
speak before officials formally commit their votes, not after. Of all 
the Interstate Waste bills I and our group have reviewed, only the 
presumptive ban will provide this.
    S. 534 would require that citizens be notified in advance and given 
an opportunity to comment if their elected representatives want to sign 
a host community agreement, or if they want to ban imports, but it 
would also allow companies and officials who want to rubber stamp a 
proposed facility with little public input to do so--all they have to 
do is forego a host community agreement. This may sound irrational to 
you, but I have no doubt that it can and will happen if S. 534 is 
enacted--despite the waste companies' assurances that host community 
agreements are now the norm and will continue to be used.
    Of course, no procedure set up by Congress can guarantee that 
abuses of the public trust will never happen, but I strongly believe 
that the presumptive ban would at least let us make sure that our 
officials know how their constituents feel before they commit their 
votes.
    Senators, we out here in western North Dakota have been trying for 
seven years to take what we feel is a common sense approach to waste 
importation by working with the waste company once we realized we 
couldn't beat it. This is not what we wanted, but we had no choice 
under current law. Our reward has been empty promises and illegal 
dumping. Giving up land forever to another State's waste is a lot to 
ask of anyone. Leveling the playing field through a presumptive band is 
the only just approach. I strongly urge you to include a presumptive 
band in the bill you bring up in your committee. Thank you again for 
the chance to respond, I await your decision.
            Sincerely,
                                                       David Olson.
                                 ______
                                 
Statement of Anthony Ciofalo, Vice President, Corporate and Government 
         Affairs, National Solid Wastes Management Association
                            a. introduction
    Mr. Chairman, I am speaking today on behalf of the National Solid 
Wastes Management Association, part of the Environmental Industry 
Associations, which represents some 2,000 companies across the United 
States that provide products and services for a better environment. 
NSWMA members collect and process recyclables; own companies that turn 
recyclables into new products; own and operate compost facilities; and 
collect and dispose of municipal and other nonhazardous solid wastes. 
In these remarks, I will use the term solid waste to refer to this 
universe of wastes.
    NSWMA members range in size from small, ``mom and pop shops'' with 
three or four trucks to large corporations with national operations. 
This industry, like others, is in a period of consolidation; many 
companies have merged or been acquired. As a result, our association 
has seen an increase in the number of members that are large, publicly 
traded, integrated companies--that is, they provide a menu of hauling, 
recycling, transfer and disposal services. These companies compete 
aggressively. But, so do our smaller, independent members, which still 
account for the majority of our members. Small companies are surviving 
through service flexibility and responsiveness. In some cases, when a 
small waste service company is bought or merged into a larger one, the 
former owner may depart and start yet another hauling or recycling 
company, and start growing again.
    Altogether, the industry that we represent is dynamic, competitive, 
and customer-oriented. Our members take great pride in their ability to 
provide efficient, cost-effective, and environmentally protective 
services.
    Almost exactly 2 years ago, NSWMA came before this committee to 
address the issue of interstate movement of waste and flow control. Mr. 
Chairman and members of this panel, today I can repeat to you what we 
advocated 2 years ago, because the message has lost none of its force. 
In fact, it has gained relevance. The message is this: restricted 
borders have no legitimate place in the management of solid waste. It 
makes neither economic nor environmental sense to give States the right 
to keep out other States' solid waste. It makes neither economic nor 
environmental sense to give communities the right to monopolize the 
management of solid waste created within their borders. These 
restrictions and controls are contrary to the trend toward bigger, 
better, more environmentally sound facilities, and they are contrary to 
the trend toward more innovative, flexible, waste management 
technologies and practices.
    One of the most visible, important trends in U.S. policy over the 
past 20 years has been the deregulation of monopolistic industries and 
the restructuring of these industries into competing, open markets. 
Banking, natural gas transportation, airlines, telecommunications--one 
by one, the market barriers have been dismantled, the providers of 
products and services turned loose to compete for customers, and 
consumers given the right to choose their provider. The benefits have 
been lower prices and greater innovation. Just think of the changes 
that followed the dismantling of AT&T's monopoly on telephones: today, 
we have faxes, pagers and cell phones; all manner of identifying, 
routing and saving calls; E-mail; and so on. Just as important, 
consumers can purchase only those services that they want and need, 
knowing for each individual service how much they will pay. Economic 
deregulation and competition unquestionably offer enormous benefits.
    This year, Congress is set to tackle perhaps the greatest monopoly 
of them all: the $200 billion U.S. electric utility industry. While I 
am not qualified to comment on the specifics of electricity 
restructuring, I expect yet another round of significant consumer 
benefits. But, here is the most important analogy between the waste 
services industry and the electricity industry: how can it be logical 
or fair for Congress to contemplate opening from coast to coast the 
borders of the huge electric utility industry, which has been 
thoroughly monopolized for decades, and, at the same time, take 
seriously the desire of a few States to close their borders to solid 
waste imports, or give special rights to a handful of solid waste 
service monopolies so that they may continue to use flow control to 
exploit their customers with hidden taxes for years on end? How can 
interstate restrictions and flow control serve the needs of citizens 
and businesses or enhance the viability of the industry that provides 
efficient, environmentally protective services? How can this be 
anything but a giant waste of time? For Congress to deregulate electric 
utilities and reregulate waste movements would be like going into a 
restaurant, ordering a heart-healthy meal and a club soda, and topping 
it off with double chocolate layer cake and cookie dough toffee crunch 
ice cream. It's not what the doctor ordered.
    Most of what you are hearing about the alleged need for Federal 
intervention in these issues is being driven by a relatively small 
group of States and communities. In fact, it is often driven by one 
level of government wishing to impose its will on another level of 
government. For example, a State government may wish to stop solid 
waste imports even when the imports provide economic benefits to local 
communities in the State. Or, a county government will require flow 
control against the will of a city, town, or village within that 
county. There are examples of this in many States, including New York, 
New Jersey, Pennsylvania, Maryland, and Minnesota.
    Throughout the United States, trash is picked up every day. 
Recyclables are sent to market every week. The job is getting done, and 
it is getting done without passports, border guards, import taxes, or 
other restrictions on commerce. The few communities and States that 
believe they need help really do not need help in this matter. 
Consumers definitely do not need the kind of ``help'' being proposed.
    Now, I would like to comment more specifically on these matters. I 
will begin with the interstate movement of solid waste.
           b. interstate movement of nonhazardous solid waste
1. Interstate Solid Waste Movements Are Part of the Trend Toward Better 
        Waste Management
    Nonhazardous solid waste does not cross State borders randomly. It 
moves through an extensive and intricate web of transactions. This 
movement is part of a decades-long trend that has created a nationwide 
solid waste management infrastructure offering multiple options for 
protection of human health and the environment, conservation of 
resources, and economic efficiency. Let me explain.
    We learned the hard way how dangerous and damaging uncontrolled 
dumping can be. As part of the nation's environmental awakening, 
Congress and the States passed laws to improve the management and 
disposal of wastes. These laws and the regulations that followed gave 
communities new options such as source reduction, composting, and 
recycling, and they created a framework of stringent environmental 
protection for combustion and land disposal facilities.
    No longer is it acceptable to dump wastes in the most convenient 
gully or openly burn trash. Comprehensive Federal rules, supplemented 
in many States by even tougher State standards, require today's 
municipal solid waste landfills to be carefully sited, designed, built, 
operated, closed, and cared for decades after closure. Every step in 
the development process must be planned. The goal is to keep wastes and 
their byproducts isolated in order to protect groundwater and the 
surrounding environment.
    As a result, we have the best, most highly engineered solid waste 
landfills in the nation's history. They protect health and the 
environment--today and into the future. However, these landfills are 
expensive to build and operate, so they are built big for economies of 
scale, that is, to keep costs down. They often serve huge geographic or 
metropolitan areas. Some can receive several thousand tons of trash 
each day.
    As these large, highly engineered landfills have replaced generally 
smaller, local and less protective ones, we have seen a drop in the 
total number of facilities. Indeed, we don't need as many. The U.S. 
Environmental Protection Agency estimated that the Nation had some 
20,000 landfills in the late 1970's. In our 1995 survey, we counted 
fewer than 2,900 landfills taking municipal solid wastes. Still, these 
facilities provide the Nation more than adequate disposal capacity, as 
I will explain later in these remarks.
    The point is that while we still have plenty of municipal solid 
waste landfills to serve the nation, we have fewer local facilities. 
Solid wastes must travel farther on average to reach disposal, and that 
travel can involve crossing State lines.
    There are side benefits of today's bigger, better, less numerous 
landfills. One is that fewer NIMBY siting battles take place. A more 
important one is that economies of scale, along with competition among 
facilities, really do keep costs in line. The tipping fee, or disposal 
fee, at the landfills that our members own and operate averaged just 
over $30 per ton in 1995, according to our survey data. A ton of trash 
is more than the average individual creates in a year, by the way. Of 
course, there is more to waste management than disposal, and household 
bills will reflect other costs such as hauling and recycling. But, it 
should be comforting to citizens and businesses to know that 
competition and economies of scale keep solid waste disposal affordable 
even as regulations and a commitment to quality by owners and operators 
keeps it safe and environmentally protective.
    We believe the facts show that solid waste landfills offer the 
public a good deal: environmental protection at reasonable prices.
2. What the Data Show About Interstate Solid Waste Movement
    The solid wastes that cross borders today for disposal include not 
only municipal trash of the sort that we produce at home and in the 
offices and cafeterias of our businesses, industries and institutions, 
but also such wastes as construction and demolition debris, automobile 
salvage residues, combustion ash, and other nonhazardous wastes.
    In 1995, the most recent year for which NSWMA collected interstate 
movement data, we found the following facts:
     About 25 million tons of solid waste crossed State lines 
for disposal.
     By far the majority of States both exported and imported 
such wastes. Forty-nine States and the District of Columbia exported 
some portion of their wastes for disposal in other States. Only New 
Mexico did not. Forty-five States imported some portion of their solid 
wastes.
     248 different and regular waste interactions occurred 
between States. We define an interaction as the movement of solid waste 
between two States or with one of our neighboring countries as an 
import or an export.
     Of these interactions, 146 (almost 60 percent) involved 
movement to neighboring States.
    Comparing the total amount of solid wastes disposed in the Nation 
with the amount that moves in interstate commerce shows that only a 
small fraction actually crosses State lines. According to Chartwell 
Information Publishers, an independent publishing company that monitors 
solid waste disposal facilities, the Nation annually disposes of about 
280 million tons of solid waste in non-captive facilities. By this 
estimate, less than 9 percent of the total moved across State lines in 
1995.
    To summarize the data on interstate movement, we can see that only 
a relatively small amount of solid waste crossed State lines in 1995, 
and these shipments were headed to facilities that must comply with 
extensive Federal, and in many cases, State regulations to protect 
health and the environment. Furthermore, most of this interstate 
movement is occurring between neighboring States.
    The picture we see is not a disposal system out of whack, but 
rather an orderly, efficient and geographically reciprocal management 
process that works day-in and day-out the same way as other free 
markets work. It underscores the Founding Fathers' notion of a national 
economic union--the United States--and the constitutional need for a 
Commerce Clause to protect this most basic and successful democratic 
vision.
    I have explained that interstate movement of wastes is related to 
the interdependence of States at a time when we have learned to build 
bigger and better landfills. Now I would like to discuss some 
additional reasons why interstate waste movements occur and make some 
related points. But first, permit me to try to defuse this issue a bit. 
What is it that really bothers opponents of interstate movement of 
trash? Surely, truck and rail movements of garbage are no more cause 
for concern than are movements of the raw materials of production--oil, 
chemicals, minerals, and the like. For the most part, all types of 
material travel safely and securely in interstate commerce every day. I 
suggest that few people would even be able to tell the contents of a 
long-haul truck transporting solid waste along a highway to its final 
destination.
    And, what about the traffic on the nation's streets and highways? 
What causes more congestion and produces more air emissions: all of the 
trash that is moved, or all of the automobiles that we drive? I think 
the answer is obvious, yet few people seriously advocate banning cars 
from the roads.
3. Interstate Waste Movements are a Function of Geography
    Many U.S. cities are situated on or near State borders. Think of 
Charlotte, Chicago, Kansas City, New York, Philadelphia, St. Louis, and 
Washington, DC., to name a few. These cities have spheres of influence 
that extend in all directions. They have interdependent relationships 
with their surrounding communities, providing work, entertainment, and 
other benefits to people who live outside the city limits, including 
those in the neighboring State. We do not prohibit commerce between 
cities and their suburbs across State lines. We do not ban commuter 
traffic between cities and adjacent States. Why should we ban exports 
of solid waste from these cities into the areas that benefit from the 
city in so many ways? As I indicated, much of the waste movement across 
State borders occurs between neighboring States. From my perspective, 
it makes no more sense to bar interstate movement of solid waste than 
to bar interstate movement of other kinds of goods. Indeed, my company 
does not think of waste collection and disposal in terms of 
``States''--we plan and operate on the basis of ``markets''--that is, 
geographic regions that are defined by what makes economic sense.
    Philadelphia deserves particular mention on this point. In 1978, 
the U.S. Supreme Court handed down the landmark decision prohibiting 
States from trying to interfere with cross-border shipments of trash. 
That decision stopped New Jersey from banning imports from 
Philadelphia. Today, the tables are turned, and Pennsylvania is 
lobbying to close the door on waste imported from New Jersey and other 
States. Obviously, the citizens of New Jersey won when their State 
government lost in court 18 years ago. We believe that, like New 
Jerseyans, Pennsylvanians will benefit equally from open borders.
4. Host Benefits Come From Interstate Movements
    Few people think of benefits from imported solid waste, and yet 
another important reason why waste moves across State lines is because 
it is invited in. Many communities view waste disposal the same as 
other industrial activity--as a source of jobs and income. These 
communities agree to host a landfill that will import solid waste 
because they have structured arrangements in which they receive ``host 
benefits'' from the incoming waste. The benefits are often calculated 
as a dollar amount paid on each ton disposed. These benefits have been 
used to support an enormous range of services such as school programs, 
senior-citizen programs, emergency services, street improvements, and 
other important community activities. Let's not forget that every 
dollar in public funds a community can raise on its own is one less 
dollar for which it must ask the State or Federal Government.
    The Reason Foundation, a non-profit public policy research and 
education organization, has studied host benefits at landfills and 
concluded that, ``Top-down siting of facilities simply is not 
acceptable to local residents. Host-community benefits introduce 
market-like decisionmaking processes that allow local citizens to make 
choices about whether, where, and how a disposal facility is sited.'' 
The Reason Foundation reports that six States have legislation to 
encourage or require compensation and/or citizen participation in 
siting. Of course, host benefits don't make much sense if waste is not 
coming from outside the immediate community.
5. Capacity Assurance Has Nothing To Do with Interstate Movements
    I want to address a concern about safeguarding the authority of 
State governments to prescribe how much disposal capacity their 
communities need to have. Imports of solid waste do not undermine these 
kinds of State requirements. Communities have the option to add 
capacity beyond a prescribed amount, if they wish, in order to receive 
host benefits from waste imports.
    Furthermore, survey data shows that imports of solid waste are not 
depriving States of adequate capacity. According to EIA surveys, the 
Nation had more solid waste disposal capacity in 1995 than it has had 
in the past 10 years. Fully 38 States reported more than 10 years of 
disposal capacity in 1995, compared to only 21 States that reported 
that much in 1992 and 25 in 1986.
    Again, what has happened is that new and better solid waste 
landfills were sited and built--even in States that were importing 
solid waste. For example, Pennsylvania is sensitive to imports, yet it 
increased its statewide landfill capacity from less than 5 years in 
1986 to more than 10 years in 1995. Clearly, solid waste imports have 
not undermined this State's disposal capacity.
    I mentioned earlier that there are different categories of waste 
that cross borders. Another category that I did not mention, but which 
also crosses borders, is hazardous waste. If States began closing 
borders to all sorts of waste, many exporters of hazardous wastes would 
have to construct new in-State hazardous waste facilities--not 
necessarily a popular public process. And, what about radioactive 
waste? Do States really want to be self-sufficient in managing these 
kinds of wastes? What about recyclables? Do States want to stop taking 
advantage of global markets in recyclables and reuse everything that 
they generate?
    When we hear calls for restricted borders in the name of self-
sufficiency, we need to pause and reflect on what might happen. A 
Federal right unilaterally to stop waste imports could cause adverse 
reactions in neighboring States. A State that closes its border to 
imports could find its exports unwelcome. States could become embroiled 
in a war of attrition, each cutting off any imports of any type of 
waste from anywhere else--and each being forced to manage all of its 
own.
    Waste disposal is no different from any other kind of industrial 
activity. It requires freedom of commerce. Not every community needs to 
have its own disposal site when it has access to competing facilities 
that safely accommodate solid waste regionally.
    In summary, only a small amount of solid waste moves between 
States. The movement is mostly between neighboring States. Solid wastes 
move for a number of very legitimate reasons, including proximity of 
disposal sites, lack of immediate local disposal capacity, and 
economics. As politically inviting as it may be, Congress should not 
allow States to ban the movement of solid waste any more than it should 
allow finished goods from one State to be banned from another State.
                     c. flow control of solid waste
1. Flow Control Is Inefficient and Raises Prices
    Flow control is an enormously expensive and inefficient way to 
manage garbage. It creates a monopoly where all local wastes must be 
sent for recycling or disposal. It insulates the designated facility 
from competition--that is, from the need to operate efficiently and 
with the needs of consumers in mind. As a result, flow control raises 
prices and hinders innovation, yet it does nothing to advance the goals 
of integrated waste solutions or protection of public health and the 
environment.
    Flow control causes rates for various services to be bundled 
together so that consumers have no idea how much they are paying for 
each individual service. They have no way of knowing if they are paying 
too much or too little, or even whether they are getting the services 
they want and need. For example, through county-wide flow control, 
residents in a municipality can end up paying for suburban curbside 
recycling that does not even serve them. Businesses can end up paying 
for services they do not use, such as household hazardous waste 
collection. Subsidies like these in other industries such as 
telecommunications were among the primary reasons for the movement to 
deregulate.
    Flow control is essentially a hidden tax. Its main purpose is to 
provide back-door tax revenue to those lucky enough to direct the flow.
2. Both Public and Private Sectors Have Been Harmed by Flow Control
    During the years that flow control was in effect, that is, before 
the U.S. Supreme Court's Carbone decision in 1994 that found it 
interfered with the constitutional right to interstate commerce, 
powerful evidence was building of the harm produced by this 
monopolistic practice. Nor did the evidence come solely from private-
sector companies deprived of markets, although that obviously has 
always been a great concern to us. It came from the public sector as 
well. We were able to collect testimony from a number of mayors and 
other public officials who had first-hand experience paying for flow 
control. (By the way, one of these mayors is now Congressman William 
Pascrell of New Jersey.) We heard how millions of dollars had to be 
diverted from municipal budgets to fund overpriced disposal. We heard 
how these precious dollars might otherwise have supported additional 
fire protection, police, education and other urgent municipal services. 
We heard how municipalities were paying for services they did not even 
receive. Here are examples of the hardships imposed by flow control:
     New Jersey, the most extensively flow-controlled State in 
the country, also has the nation's highest tipping fees, averaging more 
than $90, $11 per ton higher than the next highest State average. New 
Jersey's tipping fees exceed competitive market prices by $110 million 
per year, according to U.S. District Court Judge Joseph E. Irenas in a 
ruling against the State's flow control regulations. In other words, 
New Jersey imposes a $110-million tax on citizens and businesses 
through the tipping fee.
     The Hudson County Improvement Authority in New Jersey uses 
flow control to pay off $130 million in bonds for an incinerator that 
will never be built. The county monopoly spent over $55 million in 
planning, engineering studies and administrative expenses for a project 
that was canceled.
     In Hennepin County, Minnesota, where Minneapolis is 
located, the waste-to-energy plant was charging $95 per ton of waste 
disposed when the actual cost of operating the facility was $45-50 per 
ton. Minneapolis officials became so frustrated having to pay what 
amounted to $4 million in taxes for virtually no benefit that they used 
the threat of hauling the city's trash out of State to win a lower 
tipping fee. Of course, without the legal authority of the Carbone 
decision, Minneapolis would not have had this leverage.
     In Ohio, solid waste districts planned to use flow control 
and district fees to collect and spend some $1.2 billion for solid 
waste activities over a 9-year period. Most of those funds would have 
gone into district-owned or district-operated recycling programs in 
competition with pre-existing, private-sector recycling operations.
3. Loss of Flow Control Authority Did Not Harm Integrated Waste 
        Management Systems
    It is clear that the Carbone ruling was a blessing to towns and 
cities that felt highjacked by flow control ordinances. It gave them 
breathing room and, in many cases, leverage to win lower tipping fees. 
However, Carbone led to many dark and foreboding pronouncements on the 
part of flow control advocates. Let me cite a few from news reports at 
the time:
     ``the world of municipal solid waste management is turned 
upside down.''
     ``integrated municipal solid waste management will take a 
major step back . . .''
     ``the losers . . . are likely to be many operators of such 
environmentally popular options as MRFs, recycling programs, composting 
facilities and household hazardous waste activities. . . .''
     ``there will be chaos and confusion in the management of 
municipal solid waste.''
    I will not bother to debunk in detail all of the exaggerated 
claims. The common message was that the world as we knew it was about 
to end--that flow control was integral to modern, integrated waste 
management, and without it all of our carefully built programs would 
unravel. These assertions have since been demolished by research and 
real-life experience. EPA delivered the mortal blow in a report to 
Congress 2 years ago, after 18 months of study. The agency found that 
public health and environmental regulation, not flow control, protects 
health and the environment. It found no data to suggest that flow 
control ensured disposal capacity or was necessary to achieve the goals 
of source reduction and recycling. In fact, it found that flow control 
played an altogether limited role in the solid waste market.
    A perverse irony of flow control is that it was used in ways that 
did not benefit the environment. In Rhode Island and Illinois, 
Superfund sites were designated under flow control mandates. In Ohio, 
flow control was imposed in a way that would have directed waste away 
from many facilities meeting Ohio Best Available Technology (BAT) 
standards and into facilities not meeting those standards. Generators 
in most Ohio solid waste districts used BAT landfills before 
designation took effect, yet after the initial designations were made, 
fewer than half of Ohio's districts had selected BAT-type landfills.
    What power does local government have, without flow control, to set 
goals and enforce standards? Local government can ensure proper 
management of wastes without having to provide the actual waste service 
or dictate how the market will work. No one disputes that local 
government must set housing codes, but this does not mean that 
government must build the houses. No one disputes that government has a 
role in protecting public health and safety, but this in no way implies 
that government must limit the number of hospitals, or flow patients to 
particular doctors, nurses, and clinics. Flow control is the 
environmental equivalent of a government-backed monopoly on housing or 
health care.
4. Flow Control Is Not Necessary To Protect Bond Holders
    Today, the primary claim of flow control advocates is not the 
imminent failure of integrated waste management, but rather the 
imminent failure of investor-grade ratings on bonds used to finance 
flow-designated facilities. Bear in mind that we are now nearly 3 years 
past Carbone. ``Imminent'' is not the word that springs to my mind to 
describe the predicament that faces these former waste monopolies 
today. What, in fact, has been going on the past 34 months?
    According to flow control advocates, Moody's Investors Service has 
downgraded the bonds of 15 flow control facilities. Yet, all but one 
downgrade occurred within the first year after Carbone. In other words, 
in the nearly 2 years since May 1995, Moody's downgraded only one more 
facility's bonds.
    And, what about the ratings on the bonds to begin with? Most of the 
downgraded bonds were either A or Baa. They were not triple-A, which is 
the rating that is given to the most secure investments. Even under 
flow control, waste facilities had risk. This point was made in the 
Official Statement from the Mercer County Improvement Authority's 1992 
Solid Waste Facility Bond Prospectus. I quote:

          There can be no assurance that in any given Fiscal Year the 
        total tonnage (and/or cubic yardage) of solid waste which is 
        generated within the Region will be equal to or greater than 
        the projected tonnage (and/or cubic yardage) upon which the 
        Authority's Tipping Fees were based . . . As a result of the 
        following circumstances and other conditions and factors over 
        which the Authority exercises no control, the aggregate 
        revenues received by the Authority from its solid waste 
        operations in a given Fiscal Year may be less than the amounts 
        necessary for the Authority to meet its obligations to pay debt 
        service and maintain reserves with respect to the 1992 Bonds 
        and to pay the Authority's other expenses.

    Last September, another bond rating company, Standard & Poor's, 
issued an update on flow control financing in its municipal edition of 
CreditWeek. The report put it this way: ``Will there be rating upgrades 
if flow-control ordinances are reinstated through congressional 
legislation? The answer is no.'' Let me emphasize that: ``The answer is 
no.'' S&P makes the point that virtually all facilities that previously 
benefited from flow control have made the adjustment to a competitive 
market. In fact, S&P made this point all along. Again, to quote from 
last September's CreditWeek,

          Standard & Poor's has previously stated that few ratings 
        would be affected by the lack of flow control. The relative 
        stability of solid waste system ratings over the past 2 years 
        has been due in large part to the fact that many have displayed 
        characteristics that insulate them from the loss of flow 
        control.

    According to S&P, ``one of the primary indications of success in 
the post-Carbone environment is management's awareness of industry 
change and its ability to adapt to the business environment.'' 
Indications of what S&P calls ``strong management'' are efforts to 
maximize alternative revenue streams, cost reductions and contract 
renegotiations, increased focus on appropriate cost structures, 
unbundling of rates and services, and reduction of stranded costs.
    S&P even announced that it was changing its approach to evaluating 
solid waste credits to reflect the realities of competition, just as it 
had done with public power and investor-owned utilities. According to 
the report, ``The deregulation and increased competition facing the 
public power industry closely parallels the events that have occurred 
in the solid waste industry.'' Let's not undo our successes in weaning 
ourselves from flow control, not when we have shown how to open the 
doors of competition to the far larger electric utility industry.
5. Flow Control Cannot Guarantee Trash Or Ensure A Successful Operation
    As a waste company executive, I believe strongly that the ability 
to operate in a competitive market is a far greater predictor of 
business success than a so-called guaranteed flow of business. The 
reason is that no one can guarantee the workings of a market--not even 
a highly monopolized market. The evidence shows that even when the iron 
jaws of flow control were operating, they could not guarantee that 
designated waste facilities would always have an adequate supply of 
trash. For example, it is pretty clear that the explosive rise of 
curbside recycling and the recession in the early 1990's reduced the 
amounts of trash that designated waste facilities were counting on. 
Other disposal facilities that competed in the free market also felt 
the pinch, but since they were built to compete--for example, by 
lowering their prices or improving customer service--they were far 
better able to handle the rise and fall of the trash tide.
    Evidence also points to some designated facilities' having been 
oversized to begin with. Apparently, the guarantee of trash gave the 
designers of these facilities delusions of unlimited business. Even 
when studies indicated the limits of the local trash supply, they added 
disposal capacity, hoping somehow to be able to grow into it. This is 
acceptable when you are competing, not when you are being subsidized.
    The dilemma of uncertainty that faces central planners was 
effectively described in a Feb. 4, 1997 Washington Post article. The 
article described how a ``trash shortage'' is playing havoc with 
municipal budgets in the Washington metropolitan area. Among the 
reasons for the shortage identified in the article were private-sector 
landfills that compete on the open market, but also identified were 
recycling programs and other efforts to reduce trash. The article 
reported that 12 of 18 members of a Fairfax County, Virginia citizens 
advisory committee on solid waste quit in January because the county 
Board of Supervisors ignored warnings years ago that the county would 
have difficulty repaying the $250 million in bonds it sold to build an 
incinerator at Lorton. A question asked by one of the remaining 
advisors who sympathized with the quitters was why the county had 
gotten into the trash business to begin with. It is a question that I 
would hope Members of Congress seriously ask. Why not leave the 
business of managing trash up to the experts?
    Inability to meet facility designs with adequate amounts of garbage 
is an international issue. News reports recently have cited garbage 
shortages at German incinerators because of recycling and changing 
waste generation habits.
6. New Jersey Is A Good Example Of Flow Control's Failures
    Let's look more closely at one of the States crying the loudest for 
Federal flow control authorization. New Jersey is a State that 
instituted not only statewide flow control but statewide utility 
regulation of the waste services industry. What did it accomplish? It 
managed to force literally hundreds of small waste hauling companies 
out of business because of complex and expensive transactional costs, 
thus reducing the number from some 2,500 to slightly more than 600. It 
managed to make landfills almost impossible to site. It created massive 
bureaucracies in the form of waste authorities. It produced a system 
that dictates where all garbage must go for disposal, yet which 
ironically allows hundreds of thousands of tons to leave the state each 
year for disposal elsewhere. It produced a system that periodically 
must offer out-of-state sources of trash cheaper rates for disposal 
than in-State sources can find. Do not be fooled by claims that New 
Jersey has used regulation of waste disposal effectively. New Jersey's 
system is itself wasteful. No wonder the State feels nervous about its 
reliance on flow control.
    Why is it that flow control has been opposed by the New York State 
Conference of Mayors and Municipal Officials, by a majority of mayors 
in New Jersey's biggest cities, and by mayors and public works 
directors in other States? Why has it been opposed by the National 
Association of Manufacturers, the National Federation of Independent 
Business, the New Jersey State Chamber of Commerce, the Associated 
Builders and Contractors, the International Council of Shopping 
Centers, and other business and industry groups? Why has it been 
opposed by the Competitive Enterprise Institute, the National Taxpayers 
Union, and other advocates of better, smaller government? Why has it 
been opposed by the Sierra Club, the Natural Resources Defense Council 
and other environmental groups? The answer is that flow control, any 
way you look at it, simply is not good government. It interferes with 
the objectives of an enormous range of interests. Not many issues 
manage to annoy so many.
    The cry for help on flow control is coming from a very few sources 
who happen to cry loudly. It is coming from a few local governments 
that made poor business decisions and now need to be bailed out. They 
should not be bailed out.
    We deregulated telephones, banks, airlines, and other industries. 
We are moving ahead in electricity. Let's not force waste services to 
swim upstream against today's currents and become a network of flow 
monopolies. If we do, the day will come when the inexorable pressures 
of the market start tearing the system apart. Let's avoid the pain by 
saying today that the free market will be allowed to remain open.
    In conclusion, Mr. Chairman, flow control and interstate 
restrictions are wasteful, expensive and unnecessary. I urge the 
committee to reject any legislation embodying those concepts. I 
appreciate the opportunity to have offered this testimony.

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  Statement of Hon. Kent Conrad, U.S. Senator from the State of North 
                                 Dakota
    Mr. Chairman, thank you for this opportunity to testify before the 
Senate Environment and Public Works Committee. I greatly appreciate you 
holding this hearing to discuss interstate shipments of waste, and I 
commend you for holding this hearing so early in the 105th Congress. 
This is not a new issue to this committee or to the Senate, and the 
problem only grows more and more serious as we delay passing this 
important legislation.
    According to the Congressional Research Service, an estimated 16 
million tons of municipal solid waste travels across State lines each 
and every year. And the problem will only grow in the future. Last May, 
New York City Mayor Rudolph Giuliani and New York Governor George 
Pataki announced an agreement to close the city's last landfill, the 
Fresh Kills landfill. Without additional landfill space in New York, an 
additional 4 million tons of municipal solid waste will be on the 
interstate market every year after Fresh Kills closes on December 31, 
2001. That will mean about a 25 percent increase in the amount of 
municipal solid waste traveling across State lines every year.
    Landfills across the country are filling up, and communities are 
searching for new places to send their garbage. They are looking at 
places like North Dakota, where the air, water, and soil have not been 
spoiled by pollution and where local communities may be willing to take 
tremendous amounts of money in exchange for landfill space. Whether 
they want this imported waste or not, States and surrounding 
communities are almost powerless to stop the flow of garbage across 
their borders. Further, residents of local communities that agree to 
accept out-of-state waste often do not have all the information they 
need to make an informed choice to open their landfill space to 
imported garbage.
    Mr. Chairman, out-of-state waste has already come to my State of 
North Dakota. We have been accepting industrial waste from General 
Motors plants from all across the country--34 States I am told--
although GM has recently begun phasing out the North Dakota landfill to 
send their waste to another facility in another State. We also import 
municipal solid waste incinerator ash from Minnesota. And one waste 
company tried for many years to open a superdump in North Dakota that 
would take nearly twice as much municipal solid waste as the entire 
State of North Dakota produces. My State is not unique in its 
situation; this is happening all across the country. In fact, many 
States import significantly more waste than North Dakota.
    Mr. Chairman, the residents of my State and citizens across the 
country are tired of being powerless to regulate interstate waste. In 
fact, just last year North Dakota's voters approved an initiated 
measure that was designed to deter imports of other States' waste into 
North Dakota. That measure was ruled unconstitutional by the U.S. 
District Judge. In the Judge's decision, he wrote, ``The reality 
appears to be that trash is trash, and any law classifying it into 
home-grown vs. foreign will not work.''
    We all know, Mr. Chairman, that unless Congress acts to give States 
and localities the authority to regulate and reject interstate waste, 
this situation will continue.
    I have introduced legislation to give States the authority to 
regulate and reject municipal solid waste from other States in each of 
the past three Congresses. Just 3 weeks ago I introduced S. 384, which 
is very similar to the legislation I introduced in the 103rd and 104th 
Congresses.
    S. 384 is really very simple. First, it gives States the authority 
to regulate interstate waste. If a State wants to reject new solid 
waste shipments, my bill would allow that.
    Second, it requires that affected local governments formally 
approve of any waste import. This gives the communities the ability to 
veto proposed shipments of out-of-state waste.
    Third, it provides an opportunity for the area surrounding the host 
community to be involved in a decision to accept out-of-state waste. A 
decision on siting a solid waste landfill, especially one that will 
take large amounts of imported waste, must be a collective one, and a 
small community alone should not be able to make a decision that will 
affect a much larger area.
    Finally, my bill requires that waste companies publicly release all 
the relevant information about their proposed landfill before a 
community makes a decision on it. This information should include 
estimated environmental impacts and mitigation, economic impacts, 
planned expansion, financial disclosure, and records of past violations 
by the owner and operator of the proposed disposal site. Waste 
companies hold up the promise of jobs and economic incentives, but they 
do not want to reveal the potential risks involved in their plans. In 
many cases, they may not even reveal their overall plans until it is 
too late to stop them. One practice I have seen involves having a local 
developer purchase a site and get a permit to dispose of modest amounts 
of solid waste. The big interstate waste company then buys out the 
local party and aggressively expands the site's permit. The local 
community doesn't have a chance. This isn't fair and cannot be allowed 
to continue. Communities must be able to make informed choices.
    Mr. President, we have been working on the interstate waste problem 
in the Senate for many years now. The problem has not gone away and it 
will not go away without congressional action. The trash is still 
moving, and States and communities are almost powerless to stop it. It 
is time to enact strong interstate waste legislation into law.
    Thank you again, Mr. Chairman, for the opportunity to present this 
testimony at today's hearing.
                                 ______
                                 
    Statement of Hon. Slade Gorton, U.S. Senator from the State of 
                               Washington
    Mr. Chairman, I want to commend you for holding this hearing on 
solid waste Issues. The number of Senators and House members scheduled 
to testify this morning on behalf of their State's interests in this 
area is a true indication of the importance of this issue. The mutual 
interest of so many of my colleagues also tells me that Washington 
State is by no means alone in its desire to have specific needs 
addressed in any comprehensive legislation resolving the many problems 
associated with the movement of solid waste.
    In recent years, our local communities in Washington State have 
shouldered the enormous responsibility of managing solid waste to 
protect public health and the environment, minimize financial costs and 
legal liabilities, and offer prudent services such as recycling. We 
have developed integrated systems to accomplish these important goals, 
and flow control--the legal authority given to States and local 
governments to designate where municipal solid waste must be taken--is 
an important part of this process.
    While Washington State is by no means alone in its dependence on 
local flow control agreements prior to the Supreme Court's 1994 Carbone 
decision, our State has authorized flow control in different ways, and 
its jurisdictions have implemented flow control in a variety of ways. 
In addition to highlighting some of these differences, I also hope to 
stress the need to avoid any ``one-size-fits-all'' solutions to this 
problem.
    Washington State counties with the notable exception of Seattle, 
take the lead in providing solid waste planning, management, and 
disposal services. Counties acquire the waste collected in the 
incorporated cities and towns through interlocal agreements between the 
county, each city, and town located within that county. Cities are able 
to direct waste to the county system either by contracts with private 
haulers or flow control ordinances. Because solid waste management 
tends to be the responsibility of counties rather than cities and towns 
in Washington State, these larger jurisdictions have a number of 
facilities, and therefore do not require waste to be brought to a 
particular facility. Instead, counties direct that waste to be brought 
to any facility within the county system.
    King County, the most populous county in my State, has a solid 
waste system which consists of two landfills and seven transfer 
stations, all of which are owned and operated by the King County Solid 
Waste Division. The County utilizes its flow control authority to 
direct municipal solid waste to any disposal facility within its 
system. The King County Solid Waste Division does not incur debt on a 
facility by facility basis, but instead incurs debt for general system 
Improvements that affect multiple facilities.
    Another practice used in my State is that of the city of Seattle. 
The City uses both Its solid waste contracting authority and flow 
ordinances to all non-recycled waste generated in the City to Union 
Pacific's Seattle Intermodal Facility. At that point, compacted solid 
waste in sealed containers is transferred from truck to train for 
delivery to Waste Management's Columbia Ridge Landfill in Arlington, 
Oregon. Although the City directs waste to a private railyard, the City 
has invested significant resources to modify two different public 
transfer stations.
    Seattle's long-term disposal contract requires the City to (1) 
direct all the City's waste to a privately operated landfill and (2) 
invest significant amounts in transfer station facilities. If that 
contract were not enforceable, the City estimates that its monthly 
rates would be roughly $2 per month higher for every resident in the 
City. In addition, the City's ability to equitably finance its 
federally required expenditures to close two previously used landfills 
at a net capital cost of $76 million would be jeopardized if its flow 
control ordinance could not be enforced through a transition period.
    In addition to the strong role of local governments in solid waste 
management decisions in my State, the State legislature has also taken 
an active interest in this issue. In December 1989, the legislature 
enacted the ``Waste Not Washington Act.'' This law requires Washington 
State communities to implement solid waste reduction plans to achieve a 
solid waste reduction goal of 50 percent for 1995. The law made local 
governments responsible for planning and implementing solid waste 
management programs, including recycling and disposal options.
    The result of the legislature's efforts in this area has been one 
of the most progressive and successful recycling programs in the 
nation. The city of Seattle, for example, had a residential recycling 
rate of 49 percent in 1995. Specific commodity recycling rates are even 
higher--newspaper is at 75 percent; yard waste is at 85 percent, with a 
92 percent residential rate. In short, the Washington State law has led 
to some of the lowest cost recycling systems in the country and the 
lowest cost disposal systems in the Pacific Northwest.
    The final area where our State is particularly unique in its 
management of solid waste is the way we pay for our facilities. Many of 
our communities have financed their facilities through the use of 
general obligation bonds or bonds which were a call or a lien on 
taxpayers through the property that they own in particular counties. 
Previous attempts to grandfather flow control agreements that predate 
the 1994 Supreme Court decision have failed to address the use of 
``general obligation bonds''--only focusing on revenue bonds.
    Another heavily populated county in my State, Snohomish County, has 
financed improvements to its solid waste system through a combination 
of revenue bonds and general obligation bonds. The decision in each 
case was made based on prevailing rates, market conditions, and the 
County's debt capacity. But in all cases even when general obligation 
bonds were being backed by the full faith and credit of the County, 
solid waste revenues were expected to be used to repay those bonds. 
Thus flow control language which only protects revenue bond investments 
would only partially protect Snohomish County's commitments. As of 
1995, Snohomish County had issued $26.7 million in general obligation 
bonds for a variety of solid waste activities to be paid back in the 
year 2007.
    Clearly, a one size solution that addresses the Carbone decision 
will not work in Washington State. Because of the unique way in which 
Washington State and other States have implemented flow control 
authority--Congress must take a broader approach. Any legislation 
addressing the need to grandfather the practice of flow control prior 
to the 1994 Supreme Court decision must include the concept of solid 
waste systems, and therefore make the bill applicable to political 
subdivisions in Washington State.
    Comprehensive flow control legislation must also address State 
attempts to undertake recycling programs in accordance with its adopted 
waste management plan. We must preserve and encourage existing State 
laws like the one enacted in my State which has led to substantial 
increases in recycling rates.
    Any future attempts to grandfather flow control agreements must not 
focus exclusively on revenue bonds and must adequately address the use 
of general obligation bonds. Washington State communities should not be 
penalized simply because they elected one type of financing mechanism 
over the other.
    Finally, any future legislation relating to flow control must 
clarify that nothing within is intended to have any effect on the 
current or future authority of cities to franchise, license, or 
contract for municipal solid waste collection, processing, or disposal. 
The flow control legislation initially considered by the Senate in the 
104th Congress contained language that arguably could have invalidated 
this authority, which has been upheld by several Federal appeals court 
decisions since the Carbone decision. I am aware that many cities and 
counties across the Nation share our concern on this matter.
    Failure to include these reforms in a comprehensive flow control 
package will lead to the failure of local jurisdictions in my State to 
meet outstanding bond and contract obligations, increased costs to 
local governments and citizens, and the possible reductions of valuable 
services such as recycling.
    Mr. Chairman, I was very disappointed that our efforts to 
incorporate Washington State's concerns in a comprehensive bill 
addressing solid waste matters were not accepted by the Senate last 
year. All we are asking for is the continuation of a flow control 
regime which may very well be the most successful of any State in the 
United States.
    One size does not fit all when we are legislating in a field which 
States and localities have played a dominate role. In Washington 
State's case, one size certainly does not fit all when we are dealing 
with a State that has been as progressive and successful with its flow 
control program. I hope your committee will be willing to work with 
Senator Murray and me on these very important matters to our 
constituents. Thank you.

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 Statement of Hon. Charles S. Robb, U.S. Senator from the Commonwealth 
                              of Virginia
    Mr. Chairman, when I first introduced legislation 3 years ago to 
give local governments control over interstate waste, I thought it 
provided a compromise that would allow us to resolve this issue 
quickly. While I still believe this legislation provides an excellent 
solution to the problem of unwanted interstate trash, the resolution 
has not come about quickly or easily.
    Therefore, I have reintroduced the Local Government interstate 
Waste Control Act in the 105th Congress, hoping that we can finally 
empower localities and prevent them--literally--from being dumped on 
without their consent. The heart of the legislation is allowing local 
governments to decide for themselves whether to accept trash from 
another State. Local governments are charged with the responsibility of 
finding a place to put the garbage their communities generate. They are 
also responsible for land use planning. It seemed logical, therefore, 
to allow local governments the right to say ``no'' to those who want to 
build unwanted waste disposal facilities in the community. It seems 
logical as well to give them the right to say ``yes'' to out-of-state 
trash, if they can condition the disposal in a way that benefits the 
locality.
    Unfortunately, under existing law a locality cannot ban waste 
generated out-of-state. Under the Commerce Clause of the Constitution, 
only Congress is allowed to regulate commerce among the States. And the 
Supreme Court has ruled quite clearly that even the interstate 
transportation and disposal of trash qualifies for protection from 
unauthorized State or local interference under the Commerce Clause. If, 
however, Congress delegates to localities the authority to regulate 
commerce in garbage, then local governments could either choose to ban 
trash from out-of-state, or they could choose to accept out-of-state 
waste, but impose conditions. Such conditions may include requiring the 
landfill developer to accept all of the locality's waste for little or 
no charge, to provide a recycling program for the community, or to pay 
the local government a percentage of the revenue generated by the 
landfill. While not every community may be willing to host a private 
landfill, it should remain an option for those that do. And the option 
to say ``no'' provides the leverage a locality needs to bargain 
effectively when it decides to say ``yes'' to a landfill developer.
    The legislation I've introduced accomplishes the goal of empowering 
localities by providing that no interstate waste can be disposed of in 
a locality unless the local government has given its consent 
affirmatively. I believe this is a more effective method of dealing 
with the problems associated with out-of-state waste, because it goes 
to the heart of the issue. Interstate disposal of trash is a problem 
only when the interstate garbage is unwanted. My legislation guarantees 
that out-of-state waste does not go where it is not wanted. And where 
it is wanted, it provides a place at the bargaining table for the 
community that chooses to accept it.
    This solution to the issue protects communities without overly 
restricting interstate commerce. By not allowing walls to be built up 
around entire States, it has the advantage of avoiding the 
Balkanization of the States with regard to this article of commerce, 
which is a situation the Founding Fathers sought to avoid through the 
Commerce Clause of the U.S. Constitution.
    I hope we can resolve this issue this year, and I hope we can use 
as a basis legislation that delegates to local governments the right to 
prohibit unwanted out-of-state garbage from their communities. I would 
like to commend the committee for holding this hearing, and I would 
especially like to commend Senator Baucus, who introduced similar 
legislation last Friday. I look forward to working with him and any 
others who believe the solution to this problem rests with those who 
have historically been given the authority to decide how to deal with 
trash--local governments.
    I'd like to say one final word regarding flow control. As I have 
stated repeatedly in the past, I believe that Congress needs to provide 
protection for communities who relied on flow control prior to the 
Supreme Court's ruling in C & A Carbone v. Clarkstown, 511 U.S. 383 
(1994).
    Whlle I believe that competition in waste disposal is appropriate 
over the long term, there are many communities who borrowed funds to 
construct waste disposal facilities relying on flow control to assure 
repayment. These local governments acted in good faith based on the law 
as it existed at the time.
    There are local governments in Virginia that have local revenue 
bonds issued before the Supreme Court's ruling for existing facilities 
which could be irreparably harmed without some protection enacted by 
Congress. Time is working against these communities, and I would urge 
this committee to support a flow control bill that protects localities 
with existing facilities and existing debt.

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 Statement of the American Forest and Paper Association and the Paper 
                          Recycling Coalition
    The American Forest & Paper Association (AF&PA) and the Paper 
Recycling Coalition (PRC) appreciate the opportunity to submit this 
statement for the hearing record on the issue of municipal solid waste 
flow control. The U.S. paper industry is interested in this matter 
because of its potential to negatively impact paper recycling and 
materials recovery.
    The American Forest & Paper Association is a national trade 
association representing the U.S. forest products industry. The United 
States is the world's leading producer and consumer of forest products 
and a vital component of the nation's economy, representing more than 7 
percent of all U.S. manufacturing capacity. Our members produce more 
than 80 percent of the pulp, paper and paperboard in this country. The 
forest products industry ranks among the top ten employers in 40 
States, directly employing some 12.6 million people with an annual 
payroll of approximately $43.5 billion.
    The Paper Recycling Coalition (PRC), was formed in 1990 by 
manufacturers of 100 percent recycled paper and paperboard to further 
the development of sound public policy which supports private 
industry's role in recycling and improving the public's understanding 
of the paper recycling process. The nine member companies of the PRC 
utilize approximately five million tons of recovered paper annually in 
manufacturing 100 percent recycled paper and paperboard products.
    We recognize that the Senate Environment and Public Works Committee 
is evaluating the appropriate role, if any, for new flow control 
authority. Should the committee advance legislation to grant authority 
to impose flow control, it should be clearly targeted to address only 
those concerns associated with municipal solid waste. In order to 
ensure that recycling activities are not adversely affected, any flow 
control legislation should recognize that:
     any materials that have been separated from waste 
otherwise destined for disposal (either at the source of the waste or 
at processing facilities) or that have been managed separately from 
waste destined for disposal should not be subject to local government 
municipal solid waste flow control either for past or prospective 
programs;
     flow control over recovered materials would undermine 
significant private commercial activity in an area which has not 
historically fallen under government control or regulation;
     local governments can presently direct the flow of 
recyclable materials once the owner or generator of those recyclable 
materials freely and voluntarily transfers ownership of those materials 
to the local government by placement in a municipal collection program;
     flow control or interstate waste authority should cover 
only municipal solid waste. Non-hazardous industrial wastes are not 
part of municipal solid waste and therefore should not be subject to 
local government flow control, nor should recovered materials from non-
hazardous industrial waste be subject to flow control.
                               background
    The U.S. paper industry has been recycling paper for over 300 
years. Over the last decade, as interest in recycling spread, our use 
of recovered fiber has increased 74 percent. Recycled paper is a vital 
raw material source for the industry. Today, 37 percent of the entire 
U.S. paper industry's raw material is comprised of recovered paper (43 
million tons), up from 25 percent in 1988. In the year 2000, recycled 
paper is expected to supply 40 percent of the all fiber used to make 
new paper and paperboard products.
    While the growth in industry utilization of recovered fiber has 
occurred at the same time that local governments instituted municipal 
recycling programs, the vast majority of paper recovery still takes 
place in private or commercial programs. Residential curbside 
collection programs account for less than 20 percent of all paper 
recovery. In order to sustain the growth in recycling, it is imperative 
that our industry continue to have open market access to recovered 
paper that has made current growth possible.
    Long ago, the paper industry developed the infrastructure to 
utilize recycled paper, in the absence of mandates or other artificial 
constraints. The paper industry relies on supppliers which include a 
private network of small independent businesses that act as collectors, 
packers, and brokers. Paper is collected from commercial 
establishments, warehouses, offices, institutions and through private 
or charitable organizations including schools and churches. Municipal 
collection programs are just one part of the collection infrastructure. 
The paper is then, to the extent necessary, cleaned, processed and 
graded prior to delivery to a paper mill. Between 1993 and the year 
2000, we estimate $10 billion of capital investment will have been made 
to process recycled paper and paperboard into new products.
    To publicly demonstrate our commitment to maximizing recycling and 
minimizing the amount of paper destined for landfill disposal, the 
paper industry set a voluntary goal to recover 50 percent of all paper 
in the year 2000 for reuse and recycling. The 50 percent goal was set 
after the industry had achieved an earlier goal to recover 40 percent 
of all paper--two years ahead of schedule. In 1996, 44.8 percent of all 
paper was recovered.
    The challenge ahead is to continue to supply recovered paper and 
specifically to expand recovery of those grades of paper most in demand 
by U.S. papermakers. Maintaining reliance on market forces to determine 
access to, and use of recovered paper supplies will be absolutely 
essential to continuing the progress already underway in U.S. paper 
recovery and recycling.
           paper industry's principles regarding flow control
    The paper industry supports policies that ensure manufacturers 
unfettered access to their recovered paper as a raw material.
    Recovered Paper--received from residential and commercial 
collection programs--is the source of 37 percent of the paper 
industry's raw material. These materials are commodities, bought and 
sold on the open market like thousands of other commodities. They are 
neither solid waste nor municipal solid waste and should not be 
regulated as such. If paper does not enter, or is diverted or removed 
from, the solid waste stream, it becomes a commodity raw material and 
should not be regulated as a solid waste or subject to local government 
flow control.
    Second, the ownership of recovered materials conveys the same 
rights of ownership of other personal property. The owner of a bale of 
corrugated cartons, or bundle of newspapers must have the same rights 
as the owner of a bushel of wheat when deciding on the destination of 
the material. In other words, the owner of a recovered material has the 
right to sell, donate, transport, or contribute that material to 
whomever, or in whatever way he or she chooses. And, to the extent that 
government should not limit the rights of ownership, it should not 
restrict commerce in such materials by restricting rights to purchase 
or transport recovered materials. In no case should local government 
mandate that recovered materials be transferred to the government or 
its recycling agent. This is not to imply that the industry opposes 
voluntary curbside recycling programs which the industry supports and 
relies on as a source of raw material. The industry believes that once 
the owner/generator voluntarily transfers ownership by placing the 
materials for public collection either directly or under contract 
through an agent, the government can assume ownership of recyclables. 
At that point local government has the authority to control the flow of 
its recovered materials in whatever manner it chooses, and thus negates 
the need for Federal flow control authority over recovered materials.
 free market results in greatly increased recycling rates of all types 
                                of paper
     In 1996, 63 percent of all newspapers published in the 
United States were recovered for recycling.
     Use of recovered paper by printing-writing paper 
manufacturers is now growing about twice as fast as recovered paper use 
by the industry at-large (5.9 percent vs. 2.9 percent).
     Nearly three-quarters (73 percent) of all corrugated boxes 
were recovered for recycling in 1996. And, with growing demand for this 
material by domestic manufacturers, the challenge is to recover even 
more.
     Recovery of paper and paperboard packaging is at an all-
time high. According to the U.S. Environmental Protection Agency's most 
recent data, 45.2 percent of paper and paperboard packaging used in 
this country was recovered in 1994.
      increasing supplies of recovered paper results in increased 
                         manufacturing capacity
     Since 1988, consumption of recovered paper at U.S. mills 
has jumped more than 74 percent.
     Recovered paper consumption at U.S. mills continues to 
grow at twice the rate of growth of total production capacity--by any 
measure a significant change in raw material sourcing.
     Today, well over 400 domestic paper mills recycle some 
recovered paper, and about 200 depend entirely on it for their raw 
material requirements. Almost without exception, U.S. paper companies 
are using at least some percentage of recovered paper for their fiber.
    These statistics present powerful evidence of the paper industry's 
commitment to recycling, and its ability to perform based upon a free 
market in recovered paper. In order to meet the industry's voluntary 
goal to recover 50 percent of all paper in the year 2000, we must 
continue to have open access to the volume, quality and diversity of 
this material.
    Paper, like other commodities, is subject to the laws of supply and 
demand. Government flow control policies which prohibit or restrict the 
industry's ability to obtain the right amount and type of raw material 
jeopardize existing and future investment in paper recycling.
                                summary
    The paper industry believes local economic conditions, not laws or 
regulation, should be allowed to dictate the flow, price and quality of 
recovered materials as they do of other commodities. The tremendous 
growth in the recovery of paper for recycling has proven the validity 
of this approach. With unrestricted access to their raw material, paper 
mills will continue to increase their reliance on recovered fiber. In 
the year 2000, the paper recovery rate is expected to grow to 50 
percent, from 28.2 percent in 1986. Government interference in this 
dynamic commodity market will severely jeopardize the future growth of 
paper recycling. Flow control over recovered materials would be harmful 
as it replaces an efficient and effective market with non-market forces 
which do not reflect or understand the recovered materials markets or 
the needs of the paper recycling industry. The American Forest & Paper 
Association and Paper Recycling Coalition appreciate the opportunity to 
present our views on flow control and stand ready to assist the 
committee as you attempt to craft legislation to address this issue.
                                 ______
                                 
            Statement of Associated Builders and Contractors
    Associated Builders and Contractors (ABC) thanks the Senate 
Environment and Public Works Committee for the opportunity to submit a 
statement on proposals that would authorize State and local governments 
to enact solid waste flow-control laws.
    ABC is a national trade association representing over 19,000 
contractors, subcontractors, material suppliers, and related firms from 
across the country and from all specialties in the construction 
industry. ABC's diverse membership is bound by a shared commitment to 
the merit shop philosophy of awarding construction contracts to the 
lowest responsible bidder through open and competitive bidding. This 
practice assures taxpayers and consumers the most value for their 
construction dollar. With 80 percent of the construction performed 
today by open shop contractors, ABC is proud to be their voice.
    In May 1994, the U.S. Supreme Court ruled in C.A. Carbone Inc. v. 
Town of Clarkstown, New York, that flow control law are 
unconstitutional--as an article of interstate commerce, solid waste 
cannot be restricted by the States without explicit congressional 
authority. As a result of the Supreme Court's decision, some local 
governments are seeking legislation to authorize flow control. While it 
may have been justified in some circumstances, flow control 
nevertheless is a process which allows local governments to monopolize 
the waste system and precludes competition from lower-cost facilities.
    Flow control is anti-business and free market. It denies businesses 
the opportunity to shop among competing waste haulers, by allowing 
local governments to monopolize waste disposal services. As an industry 
which inherently generates large volumes of solid waste, builders and 
contractors are significantly affected by the price of waste disposal. 
The construction industry is concerned that expanded flow control 
authority will unnecessarily impede free markets in the waste 
management industry and result in substantial cost increases.
    In fact, a study by the National Economic Research Associates 
estimated that flow control increases disposal costs by an average of 
$14 per ton, or 40 percent. By artificially inflating the cost of waste 
collection, flow control impose a substantial hidden tax increase on 
small businesses.
    ABC sees no need for any action. Since the Supreme Court struck 
down flow-control laws, local officials have alleged that 
municipalities that had issued bonds to build landfills and 
incinerators on the assumption that they could guarantee a steady flow 
of waste to those facilities could find their debt repayments at risk 
and their bond ratings downgraded. These dire predications, however, 
have not come to fruition. According to the Moody's Investor Service, 
fewer than 15 percent of bonds related to flow control have been 
downgraded since Carbone. Those bonds that have been downgraded were 
far less than top-graded bonds to begin with, and a number of the 
bonds' downgraded were tied to forces in the solid waste industry that 
were unrelated to lack of flow control.
    Associated Builders and Contractors strongly urges you to oppose 
expansion of flow control authority. Again, ABC appreciates this 
opportunity to submit a statement for the record.

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  Statement of George Marinakis, Executive Director, Cape May County 
                     Municipal Utilities Authority
    Cape May County represents the southern most extension of the State 
of New Jersey and, as the name implies, the County is a peninsula with 
water bodies on three sides: the Atlantic Ocean to the east and south 
and the Delaware Bay to the west. The County's extensive beaches, 
wetlands and waterways attract many tourists and provide an excellent 
base for commercial and recreational fishing, water sports, 
campgrounds, bird watching and other wildlife related activities. 
Tourism and commercial fishing represent the largest industries in the 
County, which experiences a dramatic change in population from a base 
of approximately 100,000 year-round residents to a summer population 
estimated to be in excess of 600,000.
    The New Jersey Solid Waste Management Act (N.J.S.A. 13:1 E-1 et 
seq.), as amended in 1975, directed each county in the State of New 
Jersey to develop a Solid Waste Management Plan in order to ensure the 
availability of reliable long-term disposal capacity for all solid 
waste generated within the county. This Act further stressed the 
importance of incorporating within each County Plan a commitment to 
maximizing the recycling of recoverable materials within the waste 
stream and also stressed the importance of minimizing any adverse 
impact on the natural and human environment of the most densely 
populated State in the Nation.
    In response to the requirements, goals and objectives of the Solid 
Waste Management Act, the Cape May County Board of Chosen Freeholders 
authorized the preparation of the County's original Solid Waste 
Management Plan and in 1980 designated the Cape May County Municipal 
Utilities Authority (CMCMUA/Authority) as the agency to proceed with 
the financing and implementation of the County's adopted and State-
approved Plan. Since that time, the CMCMUA has aggressively pursued and 
implemented a comprehensive and balanced solid waste management system 
to serve the residents of and visitors to Cape May County. This 
integrated approach, which includes waste reduction, source separation 
and recycling, waste reclamation, and sanitary landfilling, has enabled 
the Authority to establish a system which meets the needs of the local 
environment as well as the people it serves. In 1991, Cape May County's 
efforts were recognized when the CMCMUA received a variety of honors 
for the development and implementation of this comprehensive solid 
waste management system, including four prestigious recycling awards. 
These awards include the National Recycling Coalition's first-place 
award as the best regional recycling program in the Nation, regardless 
of population. A first-place award from the Solid Waste Association of 
North America as being the best regional recycling program in the 
United States or Canada, serving populations up to 100,000. An 
Environmental Quality Award from the United States Environmental 
Protection Agency for a comprehensive solid waste management system and 
the New Jersey Department of Environmental Protection's designation as 
the best regional recycling program in the State.
    The CMCMUA's Solid Waste Complex is located on a 454 acre site and 
is comprised of a wide variety of recycling and solid waste facilities 
that are all owned by the Authority. All of these facilities, with the 
exception of the Intermediate Processing Facility which receives and 
processes source separated recyclables, are operated by the CMCMUA. The 
facilities and services provided by the CMCMUA include:
     A secure sanitary landfill with adequate capacity to 
satisfy the waste disposal needs of Cape May County for the next 30-40 
years.
     A solid waste transfer station.
     A county-wide source separation program in which all 16 
Cape May County municipalities participate.
     An Intermediate Processing Facility which receives, sorts, 
processes and upgrades source separated recyclables collected by the 
municipalities to improve their marketability.
     A bulky waste sorting and recycling operation in which 
corrugated cardboard, wood and scrap metals are removed from mixed 
bulky waste, including construction and demolition debris, for 
recycling.
     A cooperative program for receiving street sweepings and 
catch basin clean-out materials.
     A ``white goods'' and CFC recovery operation wherein 
source separated white goods are accepted for recycling and CFC 
refrigerants are also recovered and recycled.
     Wood pallets are processed into a marketable woodchip 
product.
     Source separated tree trunks and stumps are chipped and 
converted into root mulch and topsoil.
     Christmas trees are chipped to produce a mulch.
     Source separated leaves and grass clippings are composted.
     Source separated automobile and truck tires are accepted 
and delivered to a recycling facility where they are processed for 
reuse.
     Automotive and marine batteries are accepted for 
recycling.
     Used motor oil is accepted for recycling.
     Source separated household hazardous waste is accepted for 
subsequent disposal at a hazardous waste facility.
     After satisfying the needs of local charities, used 
clothing is stored and delivered to a textile recycling business.
     Technical and promotional assistance is provided to 
municipalities, businesses, institutions, residents and visitors to 
expand source reduction, reuse and recycling activities.
     A Litter Abatement Partnership Program which encourages 
roadside and community clean-up activities is conducted jointly with 
the County and participating municipalities.
     Enforcement of mandatory recycling requirements for 
``designated recyclables'' which are not allowed to be disposed of at 
the County's solid waste facilities.
    It should be noted that the CMCMUA's primary source of revenue for 
the above-noted solid waste and recycling activities is derived from 
the tipping fee charged for the disposal of solid waste at the 
Authority's Sanitary Landfill. Recognizing the relatively minor amount 
of revenue derived from the sale of the materials and/or products that 
are recycled it, therefore, should also be recognized that, with the 
exception of the CMCMUA's Sanitary Landfill itself, all of the above 
noted facilities, programs and services are in whole, or in part, 
subsidized from the revenues derived from the CMCMUA's solid waste 
disposal fees.
    Cape May County has mandated the recycling of 20 different 
materials which have been defined as ``designated recyclables'' and 
further recommends the recycling of 13 additional materials. The 
landfill prohibition on the disposal of designated recyclables, as well 
as an extensive promotional and educational program, substantially 
contributes to the overall success achieved in recycling Cape May 
County's solid waste.
    In 1995, the CMCMUA landfilled a total of 118,778 tons of solid 
waste while, at the same time, the Authority's facilities recycled 
50,209 tons of materials. Reported 1995 figures indicate that a total 
of 215,402 tons of material, or approximately 64 percent of all solid 
waste generated within Cape May County was recycled through a 
combination of CMCMUA and private sector facilities (Reference attached 
chart which summarizes the total quantity of Cape May County solid 
waste recycled 1987-1995). Unfortunately, recycling tonnage figures are 
not yet available from private sector facilities for 1996. However, it 
can be reported that the CMCMUA's facilities recycled 51,533 tons of 
material during 1996, while landfilling a total of 124,637 tons during 
the same period; thus indicating a sustained high level of 
participation and recycling success during the past year.
    A strong commitment and a great deal of work was required in order 
to achieve the results noted above. The planning, siting studies, land 
acquisition, design, permitting, financing and construction of the 
various solid waste and recycling facilities provided for in the Cape 
May County Solid Waste Management Plan also required a significant 
financial commitment. Revenue Bonds totaling approximately $48 Million 
were issued by the CMCMUA in order to finance this effort on behalf of 
County residents and businesses. This significant investment was made 
in response to the requirements of the New Jersey Solid Waste 
Management Act, the waste management planning objectives of the Federal 
Government as set forth in the Resource Conservation and Recovery Act 
(RCRA) and also in light of relevant waste flow control decisions 
rendered by the United States District Court prior to the United States 
Supreme Court's May 14, 1994 Ruling in the case of Carbone vs. Town of 
Clarkstown, New York. In other words, Cape May County's Solid Waste 
Management Plan and the financial investment required to implement this 
very effective waste management strategy was made in good faith 
reliance and with a clear expectation that the debt incurred by the 
CMCMUA when it issued its Revenue Bonds could be repaid through the 
exercise of flow control authority.
    The loss of waste flow control authority resulting from the United 
States Supreme Court decision in the Carbone Case will not only 
undermine the financial integrity of Cape May County's solid waste 
management system but will also undermine the County's ability to 
sustain the comprehensive solid waste management system which has been 
assembled in response to the County's unique needs. The appeal of low 
cost disposal options at out-of-state facilities, which are essentially 
offering a lower cost disposal option by straight landfilling, will 
undoubtedly reduce the quantity of solid waste and, therefore, revenue 
received at the CMCMUA's solid waste facilities. As a result, the 
various programs and/or services which are outlined above and which are 
subsidized in whole or in part from the revenues derived from the 
CMCMUA's solid waste disposal fees, may have to be eliminated.
    Although each county in the State of New Jersey has proceeded with 
the development and implementation of solid waste strategies consistent 
with their own needs, the various solid waste management districts 
throughout New Jersey have, reportedly, incurred a debt totaling 
approximately $1.8 Billion in planning and implementing these 
facilities and services. In the case of the CMCMUA, this Authority 
currently has a total outstanding solid waste debt of approximately $40 
Million.
    The CMCMUA urges the members of the Senate Environment and Public 
Works Committee to recognize the inequity created by the loss of waste 
flow control authority resulting from the United States Supreme Court's 
Ruling. Public bodies that have responded in good faith to legislative 
priorities and/or mandates and who have relied upon prior judicial 
decisions regarding waste flow control should not continue to be left 
stranded by the absence of Federal legislation which would 
``grandfather'' waste flow control authority to the extent required for 
such public bodies to address their financial obligations.
    The CMCMUA urges prompt congressional approval of the Federal 
legislation which is needed to address this problem.
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  Cape May County Municipal Utilities Authority, Comprehensive Solid 
                   Waste Management Program Overview
    The Cape May County Municipal Utilities Authority (CMCMUA) provides 
solid waste disposal services to approximately 100,000 year-round 
residents and over 500,000 additional summer visitors to Cape May 
County each year. The CMCMUA's Solid Waste Complex is located on a 454 
acre site and is comprised of a wide variety of recycling and solid 
waste facilities that are all owned by the Authority. All of these 
facilities, with the exception of the Intermediate Processing Facility 
which receives and processes source separated recyclables, are operated 
by the CMCMUA.
    A brief description of the major facilities and programs that 
comprise the County's solid waste management system is presented below.
                        secure sanitary landfill
    The CMCMUA's Sanitary Landfill (SLF) is a state-of-the-art, double-
lined landfill located in the northern section of the County. This 
facility, which began operations in May 1984, currently has 52 acres 
dedicated to landfilling (Phase I, Cells 1A, 1B and 1C) and provides 
leachate collection and storage with subsequent treatment at one of the 
Authority's four (4) regional wastewater treatment facilities. The 
CMCMUA's Sanitary Landfill is expected to be expanded to serve both the 
short-and long-term disposal needs of Cape May County. Specifically, 
the Authority plans to fully utilize the capacity of the existing 
landfill cells, including the currently active Cell 1C. Thereafter, the 
Authority plan to develop new cells on 42 adjacent acres within the 
existing site, and will maximize recycling efforts to enable Cape May 
County to maintain solid waste self-sufficiency for the next 30-40 
years.
                            transfer station
    The CMCMUA also owns and operates a solid waste transfer station. 
This facility which began operations in July 1984 provides convenient 
hauling services and minimizes truck traffic from the southern half of 
the County to the CMCMUA's Sanitary Landfill.
                 county-wide source separation program
    All sixteen (16) Cape May County municipalities and the Authority 
participate in a joint source separation and recycling program. For 
convenience and to encourage greater participation, municipalities 
provide curbside collection of two (2) categories of source separated 
materials; mixed paper, which includes newspaper, corrugated, kraft 
grocery bags, magazines, office paper, and junk mail; and commingled 
cans and bottles, including clear, green and brown glass, aluminum, tin 
and aerosol cans, and PET and HDPE plastic containers. These source 
separated materials are collected from residents, businesses and 
institutions that are now all required to recycle. These materials can 
either be dropped off at the Authority's Transfer Station, or they can 
be delivered directly to the CMCMUA's Intermediate Processing Facility.
                    intermediate processing facility
    The CMCMUA also owns and, under Contract with a private Operator, 
operates an Intermediate Processing Facility (IPF) which receives and 
processes source-separated recyclables. The IPF, which began commercial 
operations in April 1990, is a highly sophisticated and mechanized 
recycling facility which was modified in 1993 to increase peak 
processing capacity to 375 tons per day of recyclables. Source 
separated recyclables are received, at no charge, 6 days per week from 
municipalities, private haulers, businesses and residents. The IPF 
sorts, processes and upgrades accepted materials to improve 
marketability. All recyclable materials processed through the IPF are 
currently marketed.
                 bulky waste sorting/recycling facility
    Mixed bulky waste received for disposal at the Authority's Solid 
Waste Complex, including construction and demolition debris, is 
inspected and sorted to reclaim corrugated cardboard, wood and scrap 
metals for recycling. Wood recovered from Bulky Waste, along with 
source separated wood that is accepted at a reduced rate at the Solid 
Waste Complex, is processed into a landfill cover material.
                street sweeping and catch basin cleanout
    The Authority accepts street sweepings and catch basin cleanout 
materials which are subsequently reused for landfill cover, at no cost, 
as a way of encouraging and promoting this activity in support of local 
and county initiatives directed toward improving water quality.
                    ``white goods'' and cfc recovery
    Bulky household metals are accepted at no cost for recycling at the 
Bulky Waste Sorting/ Recycling Facility. In accordance with Federal and 
State air quality regulations, CFC refrigerants are also recovered from 
refrigerators and air conditioners prior to their being recycled.
                         wood pallet recycling
    Source separated wood pallets are accepted at no cost and are 
processed through a tub grinder. The resulting woodchips are either 
used as a bulking agent in the CMCMUA Wastewater Program's Sludge 
Composting Facility or they are colored to produce a marketable and 
popular landscaping material sold under the trade name ``Second 
Harvest''.
                         tree trunks and stumps
    Source separated tree trunks and stumps received by the Authority 
are chipped and converted into root mulch and top soil and sold to 
private landscapers or the public.
                    christmas tree recycling project
    Decoration-free natural trees are received at no cost and chipped, 
with the resulting mulch distributed to the general public at no 
charge.
              grass clippings and leaf composting project
    Source separated uncontaminated leaves and grass clippings are 
accepted without charge and composted at the Authority's Solid Waste 
Complex. The composted product is screened and sold locally.
                             tire recycling
    To provide an outlet for the proper disposal of used tires, source-
separated loads of car and truck tires are accepted by the CMCMUA and 
delivered to an out-of-county facility for processing and reuse, rather 
than landfilling these materials.
                    automotive and marine batteries
    Automotive and marine batteries are accepted at no cost by the 
Authority for recycling.
                        used motor oil recycling
    In an effort to discourage improper disposal, the Authority accepts 
without charge used motor oil at its solid waste facilities for 
recycling. Most municipalities have also established collection points 
to receive used motor oil.
                       household hazardous waste
    The Authority conducts programs in the spring and fall of each year 
to divert potentially dangerous materials from the regular solid waste 
disposal system. Under this program, household hazardous wastes are 
received from residents, schools, public agencies and businesses. With 
the exception of large quantity generators, these materials are 
accepted without charge.
                        used clothing recycling
    The used clothing recycling and reuse drop-off program is a 
cooperative effort of the County Sheriffs Department, local public 
works departments and the CMCMUA. Source separated used clothing is 
accepted free at municipal drop-offsites. The Cape May County Sheriff's 
Department collects bags of used clothing from the municipal drop-off 
sites and, after the needs of local charities have been met, delivers 
the excess to the Authority. Used clothing is marketed by the Authority 
to a Philadelphia area textile recycling business.
                     recycling promotion/education
    Extensive technical and promotional assistance is provided to 
municipalities, businesses, institutions, residents and visitors to 
expand source reduction, reuse and recycling activities. Promotional 
and technical assistance is provided to private businesses that face 
unique recycling challenges due to the large influx of summer 
vacationers. A comprehensive recycling education program has also been 
implemented in local schools. These services are provided by the CMCMUA 
without charge.
                  litter abatement partnership program
    Under a partnership agreement with participating municipalities, 
the Authority accepts, without charge, during any four (4) days within 
a calendar year, any bulky wastes which are collected as part of a 
scheduled residential bulky waste collection service. Also accepted by 
the CMCMUA, without charge, are roadside litter and other debris 
collected by the County Road Department along County roads and by 
participating municipal public works or road departments along local 
roadways.
                              enforcement
    Unique and effective recycling enforcement strategies have been 
implemented by municipalities and the Authority that include 
substantial fines, refusal to pick up solid waste, monetary surcharges, 
and a ban on landfilling of 20 designated recyclables. The landfill ban 
includes all of the materials designated for recycling at the Cape May 
County IPF, as well as leaves, used motor oil, white goods, scrap 
metals and lead acid batteries. In addition, the Authority actively 
enforces NJDEP waste flow regulations so as to assure the Authority's 
revenue stream used to support the various recycling activities noted 
above is not compromised.

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        Statement of the Government Finance Officers Association
                              introduction
    This written statement is submitted on behalf of the Government 
Finance Officers Association (GFOA), a professional association of 
13,500 State and local government officials who manage the financial 
resources of our nation's States, cities, counties, towns, districts, 
and authorities. GFOA strongly supports a grandfather provision that 
would, at a minimum, restore flow control for those jurisdictions that 
acted in good faith and relied on existing flow control statutes to 
finance solid waste facilities. GFOA urges Congress to pass a flow 
control bill this year and end the uncertainty surrounding this issue.
    As a matter of policy, GFOA believes flow control is an important 
financing tool. Flow control has permitted governments to raise 
sufficient revenues to manage comprehensive waste management programs 
through charges on those who use a facility rather than the general 
taxpayers of a community. This method of financing permits revenues to 
be collected by beneficiaries of the system within the service area, 
which may encompass a county and several other separate taxing 
jurisdictions. Therefore, GFOA has supported Federal legislation 
authorizing the use of flow control so that governmental entities could 
continue to carry out their responsibility to manage solid waste within 
their boundaries.
    GFOA is deeply troubled that Members of Congress are now 
questioning the need for flow control legislation that would 
grandfather certain existing facilities because of the lack of severe 
financial emergencies, such as defaults, during congressional 
consideration of flow control legislation. GFOA assures Members of 
Congress that the need for legislative action has not diminished. 
Communities, individual and business taxpayers, and bondholders are all 
affected by the lack of flow control.
    In this statement, GFOA responds to several issues that have been 
raised by Members of Congress and others concerning the need for flow 
control authority. These are:
     the reason for the lack of bond defaults and other severe 
financial emergencies,
     the meaning of issue-specific credit ratings,
     characteristics of projects secured by flow control, and
     disclosure to bondholders about flow control.
    Finally, GFOA is joined in this statement by 32 finance officers 
from 23 States who represent jurisdictions that have experienced 
financial hardships as a result of the loss of flow control or who 
believe it is incumbent on Congress to restore flow control authority 
for those jurisdictions that made long-term financial commitments in 
reliance on flow control authority.
  the reason for the lack of bond defaults and other severe financial 
                              emergencies
    There is a mistaken impression that flow control legislation is not 
needed because governments are not failing to make debt service 
payments on their solid waste facility bonds or filing for bankruptcy. 
This does not mean, however, that jurisdictions are not experiencing 
severe financial hardships. Default and bankruptcy are options of last 
resort and are not actions entered into unless all other financial 
alternatives have been exhausted. Governments provide services that are 
essential to the general welfare of communities and they need continued 
access to the municipal bond market to perform their essential 
functions. If they default on their bonds or file for bankruptcy, they 
will be denied future access to the bond market.
    In the lengthy history of State and local debt financing, defaults 
have occurred rarely. The confidence of the municipal bond market is 
essential and municipal issuers make every effort to honor their debt 
obligations. As a result, debt repudiation is very uncommon. Since 
1839, there have been less than 10,000 defaults by State and local 
government issuers. Almost half of those defaults occurred during the 
Great Depression. In 1937, Federal legislation was passed to permit 
governments to file for bankruptcy protection. Since then, only 437 
units of government have sought such protection. Furthermore, for some 
governments, bankruptcy is not even an option because Federal law now 
requires that State statutes specifically authorize a bankruptcy 
filing. At this time, governments in approximately 60 percent of the 
States are not even authorized to file for bankruptcy under Chapter 9 
of the Federal bankruptcy laws.
    The stigma of a default or bankruptcy and the difficult question of 
access to the bond market thereafter place extreme pressure on issuers 
of municipal debt to do everything in their power to repay their debt. 
Therefore, governments that relied on flow control have taken various 
remedial actions to maintain their fiscal stability and prevent a 
financial emergency. Remedies necessarily cause financial hardships for 
affected jurisdictions because already-scarce resources must be 
diverted to the repayment of outstanding debt. The following is a list 
of actions that have been taken by governments to maintain their credit 
ratings, prevent further downgrades in their credit ratings and avoid 
default or bankruptcy:
     the restructuring of existing debt to reduce the amount of 
annual debt service payments that need to be paid to bondholders,
     reductions in other capital expenditures,
     modifications in the use of a facility to extend its 
expected life,
     the imposition of new fees on all real property owners,
     water and sewer bill surcharges,
     the imposition of surcharges on other services,
     staff reductions,
     reductions in other governmental services and programs,
     drawdowns of unrestricted reserves,
     loans from other governmental funds to offset revenue 
losses,
     cancellation of future projects, and
     delay of maintenance on existing facilities.
    In addition to the financial hardship caused by these actions, 
affected governments have been adversely affected by
     the threat of litigation and legal expenses for 
litigation,
     the need to renegotiate contracts with municipalities and 
private haulers,
     the payment of legal, underwriting and other expenses 
associated with restructuring troubled debt,
     higher financing costs caused by downgrades,
     taking over the debt of troubled issuers,
     bumping up against tax and expenditure limitations, and
     bumping up against debt limits.
    The flow control problem has not gone away. Many governments still 
rely on flow control while litigation is pending to determine whether 
their particular State law or local ordinance is unconstitutional. 
Therefore, these jurisdictions have not yet had to deal with the full 
impact of the C&A Carbone, Inc., et al v. Town of Clarkstown, NY, 
decision. For some governments that are already trying to adjust to 
reduced tipping fees and the diversion of waste to other facilities, 
the situation is becoming even more urgent as they are running out of 
stop-gap measures and the further delays or even abandonment by the 
Congress is an ever-increasing possibility.
              the meaning of issue-specific credit ratings
    GFOA is concerned that there has been some confusion about the 
meaning of solid waste credit ratings. In its written statement to the 
committee on Environment and Public Works, Standard and Poor's provides 
important information about solid waste credit ratings, explaining they 
are issue-specific as contrasted with issuer ratings. Issue-specific 
ratings provide a current opinion of creditworthiness with respect to a 
specific bond issue for a project and not a governmental entity. Such 
factors as the security provisions of the specific financing, the 
service area economy, system operations, and project finances and costs 
are the basis for assessing the credit of these bonds. An issue-
specific credit rating does not reflect the creditworthiness of a 
government. To determine the credit-worthiness of a government, an 
analysis is performed that focuses on a review of the government's debt 
and financial performance, it's management, and the local economy.
    Issue-specific ratings only evaluate a specific project, such as a 
solid waste facility, and include a review of that project's financial 
operations. The rating takes into account the ability of the system to 
set and increase rates for the project, the flexibility it has to 
establish new fees and revenue sources, and the revenues that are 
pledged to the repayment of the bonds. While revenue increases and 
other financial adjustments necessitated by the lack of flow control 
are causing financial pain in affected governments, that would not 
necessarily mean that ratings for the project would be expected to 
change, because the ability to make these financial adjustments was 
factored into the ratings analysis.
    Furthermore, governments that are not the issuers of bonds also 
have been affected by the loss of flow control because of the 
agreements they entered into with the issuers of solid waste bonds. 
Even though these participating governments are having to make higher 
payments to cover the debt service on bonds or are experiencing other 
financial hardships, these financial consequences do not affect the 
rating on the bonds issued to finance the facility. Bond ratings tell 
only part of the story. Even in the absence of ratings changes, there 
can be severe financial hardships.
          characteristics of projects secured by flow control
    During the recent Senate hearing on flow control, several comments 
were made concerning the selection, financing and operation of 
projects. This statement provides additional information about these 
various topics.
    It was suggested that flow control is not necessary because it 
permits underwriters to support facilities that are poor investments. 
Governments, not underwriters, issue bonds and assume the serious 
financial obligation to repay the debt over the life of the bonds. The 
preparation and approval of a bond issue is a complex process involving 
both appointed and elected public officials and many outside 
professionals, including financial advisors, bond lawyers and other 
counsel, engineers, trustees, rating analysts, bond guarantors and 
underwriters. The sale of debt requires the preparation of detailed 
disclosure documents, detailed feasibility studies, complex agreements 
between other jurisdictions and the private sector, various 
certifications, and governmental approvals. To suggest that 
underwriters ramrod inappropriate projects through this process 
oversimplifies the complexity and expense involved in bringing a bond 
issue to market.
    Additionally, GFOA believes that it is important to provide some 
historical perspective about flow control. In the 1980's, there were 
shortfalls in disposal capacity and flow control was viewed as an 
innovative solution to a public-policy problem--the disposal of waste. 
The shortfalls caused fees at existing facilities to rise to the levels 
that were commonplace before the Carbone decision. The fees that were 
set to sustain new facilities were viewed as sound financial options, 
even though today they may seem unjustified. As the supply curve 
shifted and more options for waste disposal became available, users of 
the facilities sought to employ the least cost option, thus providing 
the impetus for challenging flow control.
    It has been suggested that the sale of solid waste bonds on a 
negotiated basis rather than a competitive basis was a questionable 
practice. As a matter of practice, a large number of bonds have been 
sold on a negotiated basis in recent years. While GFOA recommends the 
competitive method of sale rather than a negotiated sale in many 
instances, it recognizes that conditions may warrant a negotiated sale. 
Solid waste transactions, in fact, did exhibit some of these conditions 
as they were complex transactions and the debt was not backed by an 
issuer's full faith and credit or a strong, known or historically 
performing revenue stream. Moreover, the use of the negotiated sale 
process was expected to reduce borrowing costs because the underwriter 
would be familiar with the details of the transaction, having been an 
active participant in the planning process.
    During the recent Senate hearing, the committee was informed of an 
unidentified project for which bonds had been issued, but construction 
had not occurred. This development is a rather unusual occurrence in 
the municipal market, which could have serious financial repercussions 
for an issuer. Presumably, the issuer would ``call'' the bonds at the 
first opportunity and pay off the bondholders before the bonds matured, 
because of the borrowing costs that are being incurred. There are 
several Federal tax and securities law provisions that need to be 
considered in this context. Current Federal tax law provisions permit 
an issuer to invest bond proceeds that are not spent for construction 
purposes, but the law also requires the issuer to rebate to the Federal 
Government any investment earnings above the bond yield. (These 
earnings are called arbitrage earnings.) As a result, there is no 
financial incentive to issue bonds for a project that is not likely to 
go forward. Additionally, issuers incur significant borrowing costs 
that cannot be recovered by investment of the bond proceeds, so the 
issuer is actually ``out of pocket'' for the expenses.
    Another consideration is the fact that Federal securities laws 
provide that State and local governments have a duty to produce 
disclosure documents that do not contain misstatements or omissions of 
``material'' facts. Failure to meet these requirements could result in 
a Securities and Exchange Commission enforcement action or private 
litigation. Proceeding with a project that is not viable and using bond 
proceeds in a manner inconsistent with the way in which the disclosure 
documents describe their use could invite an SEC investigation.
    At the hearing, it was suggested that solid waste issuers are 
``awash with cash'' because of the high fees that were charged. As we 
have explained above, the economics of the industry at the time many of 
these facilities were financed justified the rate levels that were 
established. Additionally, from a financing perspective, it is 
important to remember that some regional solid waste authorities that 
sold solid waste bonds were independent entities that did not have 
taxing authority, so they were completely dependent on the revenues 
earned by the system. As a result, it is necessary for them to 
establish reserves for debt service coverage or replacement of property 
and to have resources on hand to respond to such contingencies as 
technology failures, economic downturns, business closures and other 
events affecting the operations of the facility.
              disclosure to bondholders about flow control
    Since the 1970's, the GFOA has prepared and updated disclosure 
guidelines for issuers of State and local government securities that 
set forth the items that should be included in the official statements 
of municipal bond issuers. Among the items that are highlighted for so-
called enterprise facilities such as solid waste, are the sources of 
revenue to pay the debt service and any legal matters such as any 
pending judicial, administrative or regulatory proceedings that may 
significantly affect the enterprise's ability to perform its 
obligations to the holders of the securities being offered.
    During the Senate's recent flow control hearing, the question of 
bondholder disclosure was raised. Attached to this statement are 
several examples of official statement disclosures concerning issuers' 
ability to control the flow of solid waste and State law enabling 
legislation. It will be noted that these documents are for transactions 
before 1988. After this time period, the pace of solid waste financings 
that relied on flow control declined dramatically because the supply of 
disposal options had increased and such projects were not financially 
feasible. There is no discussion of any legal challenges to flow 
control because during this time period there had been no attacks on 
the practice on Commerce Clause grounds. There is some discussion of 
whether flow control laws were anticompetitive and violated antitrust 
laws. However, by the mid-1980's, the courts had clarified that if 
there was State enabling legislation authorizing flow control, there 
would be no antitrust violation. Therefore, the bondholders who 
purchased flow control bonds did not receive any warning about the risk 
that their bonds might decline in value because of the possibility of 
the invalidation of flow control authority. This disclosure was not 
warranted at the time because flow control was a legally permitted 
financing tool of unquestioned status.
                          concluding comments
    The U.S. Supreme Court's Carbone decision changed the rules in the 
middle of the game for many communities that relied on flow control. 
The relief that governments are now seeking to prevent greater 
financial instability is a reasonable request that will prevent the 
imposition of further burdens on governmental units whose financial 
condition has been imperiled; taxpayers who are paying higher taxes, 
fees, and surcharges; and bondholders who have seen a diminution in the 
value of their securities. It would be unfair to deny this request.
    To suggest that a vote for a limited grandfather exception is a 
vote for a tax increase demonstrates a complete lack of understanding 
of our system of public finance. Without flow control, many governments 
are having to impose new taxes, fees or surcharges on general taxpayers 
to avoid the untenable--a default or bankruptcy. In effect, assets are 
being diverted to waste haulers from local taxpayers. Ironically, 
because of the small number of large firms that control landfills, 
transfer stations and other facilities in many areas, customers may not 
benefit from lower fees. The ability of firms to control market prices 
means the market is not purely competitive and the demise of flow 
control will not guarantee more price competition and greater consumer 
protection.
    The Federal Government and State and local governments are partners 
in our Federal system. The Federal Government should be helping local 
governments to live up to the financial commitments that were made when 
flow control was the law of the land. Unlike other Federal actions that 
are needed to help governments, the passage of flow control legislation 
does not even cost a dime. Flow control does not affect every 
government, but that should not be the measure of its importance. Just 
because it is not front page news does not mean it is not of great 
significance.
    Mr. Chairman and members of the committee, GFOA reiterates its 
support for a grandfather provision and appreciates this opportunity to 
submit a written statement. The Association would be happy to provide 
additional information, as needed.
            additional support for flow control legislation
    The Government Finance Officers Association is joined in its 
written statement by finance officers from throughout the United 
States. They represent jurisdictions that are experiencing financial 
hardships brought about by the lack of flow control authority or who 
believe it is incumbent upon the Congress of the United States to 
restore flow control for those governmental units that made long-term 
financial commitments based on that authority. They are:

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           Statement of Integrated Waste Services Association
    The Integrated Waste Services Association (``IWSA'') is pleased to 
submit testimony before the Senate Environment and Public Works 
Committee. IWSA is a national trade association representing the waste-
to-energy industry. Our Association encourages the use of waste-to-
energy technology as a key component of community programs to handle 
solid waste. IWSA members include American Ref-Fuel Company, Foster 
Wheeler Power Systems Company, Katy-Seghers, Montenay Power 
Corporation, Ogden Martin Systems, Inc., Westinghouse Electric 
Corporation, and Wheelabrator Environmental Systems Inc., as well as 50 
other associate members including local governments and firms involved 
in sold waste management. Together, our members represent 66 of the 114 
waste-to energy facilities nationwide. IWSA member facilities process 
approximately 83,000 tons of waste each day and generate enough energy 
to meet the electricity needs of more than one million households.
    IWSA supports the need for legislation that transitions local 
governments that relied on the ability to control waste within their 
boundaries as a basis for incurring legally binding financial 
obligations. We believe a narrowly crafted bill is required to 
establish a transition period spanning the time when local governments 
relied on flow control to the current market-based system. Such 
transitional legislation that provides for bonds to be paid off and for 
legally binding contracts to be performed would mitigate the hardships 
that will otherwise be experienced by communities. The legislation 
should cover only those bonds and contracts issued upon reliance of 
flow control and only for such time as necessary to pay off those 
original instruments and such environmental retrofits as are required 
by the Clean Air Act Amendments of 1990 and financed by a date certain. 
We believe that the compromise legislation of January, 1996, supported 
by a wide array of stakeholders, accomplishes these purposes and we 
commend it to you for your consideration.
    Flow control statutes and ordinances were developed at the turn of 
the century to assist local governments with their task of managing 
transport and disposal of household trash. The term ``flow control'' 
has been used to define the statutes and ordinances that local 
governments enacted allowing them to deliver to a designated facility 
all municipal solid waste generated within the jurisdiction. Flow 
control laws were used most often to manage the handling, transport, 
recycling, treatment and disposal of trash. In 1994, the U.S. Supreme 
Court handed down a decision in C&A Carbone v. Clarkstown that struck 
down the use of flow control authority as counter to the Commerce 
Clause and therefore unconstitutional. Unless and until the Congress 
acts, flow control is now unavailable to those local governments that 
relied on it in good faith.
    Until the Supreme Court decision, local governments used flow 
control to ensure that sufficient trash was available over a period of 
years as needed for the issuance of long-term bonds used to finance 
solid waste management programs such as recycling, landfills, 
composting, household hazardous waste collection, and waste-to-energy 
plants. Approximately $4 billion in debt currently is outstanding that 
was issued to finance waste-to-energy facilities based upon reliance of 
local government's flow control authority.
    More than $2 billion worth of debt has been downgraded due to the 
lack of flow control authority. You will hear a lot about the fact that 
local governments have not defaulted on their bonds. This is true. The 
ability to borrow money to pay for essential services surely is too 
important to local officials to allow defaults. To avail themselves of 
the bond market, local governments have cut jobs, levied taxes, and 
slashed programs and still face a higher cost of borrowing money. In 
fact, the downgrading of solid waste bonds has impacted the borrowing 
power of all municipal debt.
    Government default has never been and should not now be the 
starting pistol that triggers congressional action. We ask that the 
Congress consider instead the issue of equity and a community's good 
faith reliance on flow control by providing a basis for local 
governments to discharge their obligations.
    Flow control should not be an issue that pits local government 
against the marketplace. Instead, it is an issue that requires an 
equitable solution for those who relied in good faith on flow control. 
Flow control is not a philosophical question. It is a question of 
equity. Fairness would dictate that when the rules are changed in mid-
stream, there is offered some protection to those who are caught off 
shore.
    Thank you for your consideration of our views.

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                     [From Waste Age, January 1997]

Flow Control Uncertainty Upsets Investment Ratings of Two County Waste 
                              Authorities

                           [By Sarah Halsted]

    Due, in large part, to market uncertainty created by a decline in 
systems that guarantee waste flow, Moody's Investor Service (New York 
City) has been watching and rating the progress of investments made by 
several county solid waste authorities.
    Two authorities in particular--New Jersey's Mercer County 
Improvement Authority (MCIA) and Florida's Dade County Solid Waste 
Sysem--have felt the impact of Moody's observations and of a recent 
Federal district court decision, Atlantic Coast Demolition & Recycling, 
Inc. v. Board of Chosen Freeholders of Atlantic County, et al., which 
effectively dismantled the flow control system in New Jersey (see Waste 
Age, August 1996, p. 8).
    Ratings are extremely important to any business because crediting 
is one factor determining yield on a bond, says Charles Emrich, 
assistant vice president of Moody's. Downgrading creates a higher 
interest rate, makes bonds riskier, and increases the cost of 
borrowing.
    Although it has not yet been downgraded, MCIA has been placed on 
``surveillance watch,'' according to Chee Mee Hu, manager of a revenue 
specialties group for Moody's.
    MCIA is on shaky ground, particularly after the Mercer County Board 
of Freeholders recently rejected amendments proposed by the authority 
necessary to complete the construction of its 10-year-old waste-to-
energy project. The amendments were necessitated by the demise of flow 
control ordinances, and, in order for the amendments to be accepted, 
both the freeholders and the Department of Environmental Protection had 
to offer their approval.
    Initially, MCIA wanted to build the incinerator to meet State 
mandates and had relied on flow control to maintain and operate the 
project.
    Without a guaranteed waste stream, however, and because of the 
freeholders decision, MCIA is now left with approximately $190 million 
in outstanding solid waste revenue bonds. Almost $40 million of the 
bonds are uninsured and are currently rated ``Ba,'' meaning the bonds 
are considered ``speculative'' by Moody's. The remaining $150-million 
bonds are insured by FGIC and have an ``Aaa'' rating, Moody's highest-
quality investment grade.
    One of MCIA's key proposed amendments was to have a private 
company, Ogden Martin, assume ownership of the project after its 
construction. It is for this reason, among others, that Anthony 
Carabelli, president of the Board of Freeholders, voted the amendments 
down.
    Estimating the cost of financing the project for 20 years to be 
half a billion dollars, Carabelli says the cost was far too great, 
particularly since Ogden Martin would own it in the end. ``The 
conditions of the contract, when the project is built, say it would 
turn to Ogden Martin's [ownership],'' making the proposal unreasonable, 
Carabelli says. Ogden Martin would end up paying only 20 percent to the 
freeholders' 80 percent, yet ``it would be [Ogden's] incinerator--why 
should we pay for someone else's ownership?''
    Carabelli also says he took the financial difficulties five other 
New Jersey incinerators are facing into consideration when he made his 
decision. The other incinerators ``are wanting for garbage and would be 
only too happy to have our garbage,'' he says.
    Only 20 percent of the garbage to be collected in the proposed 
incinerator would have been collected from other areas--yet another 
reason Carabelli voted against the plan.
    Mercer County still has a 2-year contract with the Groves Landfill 
in Pennsylvania.
    According to Emrich, analysts are currently in discussion with MCIA 
to determine its future course. MCIA is facing very real and immediate 
problems, though, with a debt service payment due in the spring and no 
interest to pay it, says Mee Hu. ``It's a very tight situation, we're 
basically seeing a very tight outlook, very negative,'' she says.
    On the other hand, Moody's analysts are far more optimistic about 
the future of Dade County's Solid Waste System. The county, which 
already has an incinerator up and running, has ``gotten its act 
together,'' says Emrich.
    Dade County, which faced diversion rates of 700,000 tons per year 
in 1994, and even greater diversion rates of 940,000 tons in fiscal 
1995, incurred a loss in gross disposal revenue of approximately $41.3 
million in fiscal 1994, and a loss of approximately $53 million in 
1995, according to Emrich.
    The system, which consists of a resource recovery facility, 
landfills, and transfer stations, initially relied on a guaranteed 
waste flow. The termination of flow control ordinances abruptly put an 
end to the flow, leaving the Dade County system with uncompetitive tip 
fees. As a result, Moody's downgraded it slightly from an ``A'' (upper 
medium grade) rating to a ``Baal'' (strong medium grade) rating in May 
of last year.
    In response to the downgrading, but mostly because of an increase 
in waste diversion, Dade County implemented a business strategy, a main 
part of which was the lowering of tip fees from $59 per ton to $45 per 
ton. This new competitive edge allows Dade County to attract local 
municipalities and haulers to sign long-term contracts, once again 
ensuring a guaranteed waste flow.
    The fees are fixed for 3 years and will be adjusted by the rate of 
inflation thereafter, capped at 5 percent. According to Moody's, 
contracts have increased the amount of committed waste to 90 percent 
for 1997, up from about 40 percent in 1991.
    As another part of its strategy, Dade County is diversifying its 
revenue stream by receiving revenue from a portion of the utility 
service fee, and introducing a disposal fee on haulers in the 
unincorporated areas of the county. Expenses are fixed and advance at 
2.6 percent per year, according to Moody's.
    As a result of these strategic changes, Dade County's credit 
quality is expected to improve, Emrich says.
                                 ______
                                 

              [From The Smithtown News, February 27, 1997]

                         Waste Flow Drying Up!

                commercial garbage revenue off $125,000

                            [By David Ambro]

    Despite optimistic projections included in the 1997 budget by 
Supervisor Patrick Vecchio, the flow of commercial solid waste to the 
Town of Smithtown has dropped dramatically.
    The Town controls the flow of residential solid waste through a 
municipal refuse district and contracts with garbage carters. There is, 
however, no commercial garbage district but in the past the Town 
implemented flow control legislation, which mandated that the garbage 
be delivered to the incinerator. The United States Supreme Court, 
however, recently struck down garbage flow control legislation. The 
court ruling left Smithtown with no way to control municipal refuse.
    Despite the lack of flow control legislation, Supervisor Vecchio 
included the same level of commercial solid waste revenue in the 1997 
budget as in 1996, about $2.7 million. He based the projection on a 
meeting he had with garbage carters, who reportedly agreed to deliver 
Smithtown's solid waste to the incinerator.
    So far, however, the flow of commercial garbage to Smithtown is 
well below anticipated revenue. During the Town Board work session 
Tuesday, February 25, Councilman Michael Hollander asked Town 
Comptroller Anthony Minerva for an update of the commercial waste flow 
situation.
    ``It was a disastrous month,'' said Mr. Minerva about January. He 
told Mr. Hollander that the Town brought in about $125,000 below the 
projected amount on the commercial waste revenue line.
    After the work session, Mr. Minerva told The News that he feels the 
loss of revenue was a direct result of the flow control legislation 
being struck down. He said that within the next few months, the Town 
Board will likely begin to consider implementation of a municipal 
commercial garbage district.
    During an interview after the meeting, Supervisor Patrick Vecchio 
said that he plans to discuss the situation with the Town Board next 
week, and that he is still researching certain aspects of the 
situation. The Supervisor said that he will ask the town Board to 
explore certain creative alternatives to restore the revenue from the 
commercial garbage.
                                 ______
                                 

                [From The Smithtown News, March 6, 1997]

                     Businesses Face Town Trash Fee

    $1.9 million budget gap projected from commercial waste shortage

                            [By David Ambro]

    In an effort to head off a projected multi-million dollar loss of 
revenue from commercial garbage disposal, the Smithtown Town Board may 
begin to charge businesses a solid waste disposal fee modeled on a 
system in Tulsa, Oklahoma.
    Under the provisions of the plan, each commercial property in the 
Town will be individually evaluated to determine its annual volume of 
solid waste and the fee charged to the business will be based on that 
volume. The fee will cover the disposal of the commercial garbage at 
the bi-town incinerator and the business owners will then have to 
renegotiate with the individual garbage carter to pay only for the 
collection costs but not for the disposal costs.
    Smithtown Supervisor Patrick Vecchio, who is pushing the Tulsa 
plan, said that it is more equitable than other alternatives, such as a 
commercial refuse district or simply passing along the revenue 
shortfall to the taxpayers.
    ``I believe that it is a forthright, uninvolved method to pay the 
fair cost of commercial garbage generation, which is currently being 
diverted away from the [incinerator] plant and costing taxpayers--
commercial and residential--taxes they ought not pay,'' Supervisor 
Vecchio said. ``This plan should result in a fairer shake for the 
taxpayers.''
    The supervisor said that a Town Board majority supports 
implementation of the Tulsa system in Smithtown. Before the plan can be 
implemented, a public hearing will have to be held but one has not yet 
been scheduled.
    According to Supervisor Vecchio, the Town is losing over $100,000 a 
month in revenue from commercial solid waste disposal. He said that the 
question now becomes how to make up that lost revenue without burdening 
the taxpayers. He said that the Tulsa plan has been tested and proven 
to work in a city of over 500,000 people.
    In Babylon, the Town created a commercial garbage district to 
ensure flow control of garbage to its incinerator. Under that system, 
the Town taxes business owners and enters into contracts with carters 
for service, much like the Smithtown residential district.
    Supervisor Vecchio said that a commercial refuse district similar 
to the one imposed in Babylon takes much longer to implement (than 
would the Tulsa system) and creates numerous inequities among the 
commercial property owners. For example, he said that a shoe repair 
store with a very low volume of garbage, and a deli with a very high 
volume of garbage, both operating from similar sized stores, are 
charged the same amount. Under the Tulsa plan, according to the 
Supervisor, the fee charged to a business will be more closely 
associated to the waste flow.
    At its meeting Tuesday, March 4, the Smithtown Town Board voted 4-1 
to send three Town officials to Tulsa, Oklahoma, to review the system. 
Going on the trip will be Town Solid Waste Coordinator John Trent, Town 
Comptroller Anthony Minerva and Town Systems Analyst Nicholas DiMattei. 
Councilman Michael Fitzpatrick was also approved for the trip but will 
only go if Mr. DiMattei, whose wife is about to give birth, is unable 
to attend.
    Councilwoman Jane Conway cast the lone vote in opposition to the 
Tulsa trip. ``It's just a waste of money in my opinion. International 
business is conducted through teleconferences so I don't see the need 
to travel to Tulsa to find out about their system,'' Councilwoman 
Conway said during an interview after the meeting.
    Councilwoman Conway said that the Tulsa plan is contained in an 
ordinance, a copy of which was provided to Town officials this week. 
She said that rather than sending employees to Tulsa, the Town Board 
should make its decision based on a review of the legislation and that 
little else can be derived from a trip to the city.
    In addition to her concerns about the trip, Councilwoman Conway 
said that she has some concerns about the Tulsa plan itself. She said 
that many local businesses have contracts with their carting company 
that may be difficult to change. The commercial solid waste fee, she 
said, may then become an additional cost to many local businesses.
    According to information provided to the Town Board last week by 
Mr. Trent, it is projected that at the present rate the Town will 
receive about half the amount of commercial solid waste in 1997 as it 
did in 1996. If that trend holds, which Town officials fear it will, 
the Town will be left with a $1.8 million revenue shortfall by the end 
of the year.
    Commercial garbage carters are presently charged $65 per ton to 
dump the solid waste at the bi-town incinerator. Smithtown uses the 
commercial solid waste as a revenue to offset expenses. The decline in 
commercial solid waste has been steady for the past 6 years but in the 
past 3 years there has been a radical drop in the amount of commercial 
waste coming to Smithtown. The drop off is believed to have resulted in 
a State Supreme Court ruling, which deregulates the industry and 
strikes down municipal flow control legislation.
    From 1992 to 1995, the commercial garbage delivered to the Town 
during the month of January ranged from 3,400 to 3,900 tons. In 1996 
the volume dropped drastically to 2,600 tons and in 1997 only 1,126 
tons of commercial garbage came to the Town.
    Mr. Trent projects that at the present rate by year's end the Town 
will receive only 14,339 tons of commercial waste, down from 27,862 in 
1996 and from 38,881 in 1995, 47,777 in 1994, 51,015 in 1993 and 53,845 
in 1992.

[GRAPHIC] [TIFF OMITTED] TH072.403

               Statement of Jefferson Smurfit Corporation
    Jefferson Smurfit Corporation (JSC) is a leading manufacturer of 
paper and paperboard products whose predominant raw material is 
recovered paper (wastepaper). Additionally, one of their divisions, 
Smurfit Recycling Company, is the largest collector and marketer of 
recovered paper in the Nation (if not the world as a private 
enterprise). Annually, JSC collects in excess of 4.5 million tons, 2 
million of which is consumed internally while the balance is sold to 
other paper mills as a raw material or exported. Examples of JSC's 
paper packaging are cereal boxes, toy boxes, corrugated cardboard 
containers, and industrial paper tubes. Also, JSC is the largest U.S. 
producer of recycled content newsprint.
    Jefferson Smurfit supported S. 534 from last session and, if new 
legislation is drafted, it should be the starting point. While it 
generally provided the exemption for recyclable materials, some of the 
language should be clarified.
    We support, in full, the written comments provided the committee by 
the American Forest and Paper Association (AF&PA).
    JSC would support legislation that builds on, and refines the 
principles set forth in, S. 534 which would recognize:
     any materials that have been separated from waste 
otherwise destined for disposal (either at the source of the waste or 
at processing facilities) or that have been managed separately from 
waste destined for disposal should not be subject to local government 
municipal solid waste flow control either for past or prospective 
programs;
     flow control over recovered materials would undermine 
significant and long term private commercial recovery activity in an 
area which has not historically fallen under government control or 
regulation;
     presently, local governments can direct the flow of 
recyclable materials once the owner or generator of those recyclable 
materials freely and voluntarily transfers ownership of those materials 
to the local government by placement in a municipal collection program;
     flow control or interstate waste authority should cover 
only municipal solid waste. Non-hazardous industrial wastes are not 
part of municipal solid waste and therefore should not be subject to 
local government flow control.
    JSC and other paper manufacturers can increase their recycled paper 
capacity only in an environment that ensures unfettered access to their 
recovered paper as a raw material. That access is driven by two broad 
principles.
    Recovered Paper--received from residential and commercial 
collection programs--is the source of 37 percent of the paper 
industry's raw material. These materials are commodities, bought and 
sold on the open market like thousands of other commodities. They are 
neither solid waste nor municipal solid waste and should not be 
regulated as such. If paper does not enter, or is diverted or removed 
from, the solid waste stream, it becomes a commodity raw material and 
should not be regulated as a solid waste or subject to local government 
flow control.
    Second, the ownership of recovered materials conveys the same 
rights of ownership of other personal property. The owner of a bale of 
cardboard boxes or bundle of newspapers must have the same rights as 
the owner of a bushel of wheat when deciding on the destination of the 
material. In other words, the owner of a recovered material has the 
right to sell, donate, transport, or contribute that material to 
whomever, or in whatever way he or she chooses. And, to the extent that 
government should not limit the rights of ownership, it should not 
restrict commerce in such materials by restricting rights to purchase 
or transport recovered materials. In no case should local government 
mandate that recovered materials be transferred to the government or 
its recycling agent. This is not to imply that JSC opposes voluntary 
curbside recycling programs which we support and rely on as a source of 
raw material. We believe that once the owner/generator voluntarily 
transfers ownership by placing the materials for public collection 
either directly or under contract through an agent, the government can 
assume ownership of recyclables. At that point local government has the 
authority to control the flow of its recovered materials in whatever 
manner it chooses, and thus negates the need for Federal flow control 
authority over recovered materials.
                                 ______
                                 
 Statement of the Local Government Coalition for Environmentally Sound 
                    Municipal Solid Waste Management
    Dear Mr. Chairman: This statement is submitted by the Local 
Government Coalition for Environmentally Sound Municipal Solid Waste 
Management (Coalition) for inclusion in the record of the Environment 
and Public Works Committee's March 18, 1997 hearings that addressed, 
among other things, municipal solid waste (MSW) flow control 
legislation (this statement is also being supplied in computer disk 
format). As a preliminary matter, we should note that the Coalition is 
an ad hoc consortium of cities, counties, solid waste management 
authorities and related associations concerned with MSW flow control 
legislation and other critical MSW management issues. The Coalition's 
members are dedicated to integrated municipal solid waste management 
that provides full protection for public health and the environment, 
and reliable, long-term municipal waste management solutions at 
reasonable and stable costs for their respective communities.
    This statement addresses two separate matters that are before the 
committee in connection with flow control legislation. The first is the 
pressing need for--and very strong equitable arguments justifying----
Federal legislation to ``grandfather'' uses of flow control authority 
in effect prior to the Supreme Court's decision in the Carbone case 
(C&A Carbone, Inc. v. Town of Clarkstown, New York, 114 S.Ct. 1677 
1994)). Such legislation is needed to relieve the adverse financial 
impacts already sustained by a number of communities and to avoid 
further consequences for those communities and others. Second, we 
respond to criticisms offered at the committee's March 18 hearing 
regarding decisions made long ago by a number of communities to rely on 
flow control authority in addressing their diverse MSW2 management 
needs.
  i. the need for federal legislation to grandfather existing uses of 
                         flow control authority
    Various witnesses testified at the March 18 hearing regarding the 
need for Federal legislation that would grandfather uses of flow 
control in effect at the time of the Carbone decision (e.g., witnesses 
Johnson, Leff and Cahill). Indeed, even the witnesses who opposed flow 
control as a general matter recognized (with one exception) that 
grandfathering legislation is appropriate because of the changes 
brought about as a consequence of Carbone. In fact, the need for 
legislation to grandfather such past uses of flow control is 
indistinguishable from the ``stranded investment'' issue that has been 
widely recognized as requiring legislative relief in connection with 
restructuring of the electric utility industry. As explained by the 
witnesses who testified in support of flow control, the consequences 
that communities throughout the country are now facing due to the 
absence of Federal legislation include precipitous declines in waste 
deliveries and resulting bond downgrades, increased taxes to offset 
declines in tipping fee revenue, termination of recycling and other 
environmentally essential programs, employee layoffs and terminations 
and ever-increasing upward pressure on tipping fees as the unavoidable 
fixed cost burden of waste management infrastructure (e.g., recycling, 
composting, waste-to-energy, etc.) is shared by fewer users (further 
elaboration regarding these adverse consequences is provided in the 
testimony of witnesses Johnson, Leff and Cahill and need not be 
belabored here).\1\
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    \1\ In addition, because flow control authority is a tool that 
facilitates a community's ability to develop long-term MSW management 
solutions at stable prices, flow control assists in addressing the 
concerns of waste importing States, as witnesses Seif and Cahill each 
testified. See Cahill testimony at 3 (``The Carbone decision resulted 
in the exportation of approximately an additional one million tons 
annually of municipal solid waste generated in New York State. . . . If 
flow control is re-instituted for those communities that initially had 
it, localities can once again manage solid waste within their own 
borders at more competitive tipping fees'').
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    Despite these adverse impacts, it was nevertheless suggested in the 
March 18 hearing record that Federal flow control legislation may not 
be necessary because the financial impact to date (that is, the extent 
of bond downgrades to date and the absence of bond defaults) has not 
been sufficiently severe to require legislative action. The number of 
bond downgrades (17 in total) is significant, however. Moreover, 19 
additional solid waste bond issues have been rated ``unstable--credit 
watch'' by Moody's Investors Service due specifically to the absence of 
flow control legislation. Furthermore, the absence of flow control 
legislation is also affecting credit-supported solid waste bonds that 
are secured by general obligations guarantees or bond repayment 
insurance (in addition to previous reliance on flow control authority). 
On an overall basis, approximately one-half of all solid waste bond 
issues are in one of the three risk categories outlined above and would 
benefit from legislation that grandfathers pre-Carbone uses of flow 
control authority. Indeed, Moody's testimony to this committee notes 
that the probable benefit of the stabilized waste stream that would 
result from legislation to grandfather pre-Carbone uses of flow control 
will be to strengthen credit ratings.\2\
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    \2\ It should also be noted that focusing on the number of bond 
downgrades or the absence of bond defaults is to disregard the fact 
that local governments will do everything within their ability to avoid 
a downgrade or the truly debilitating impact of a bond default. The 
preferred policy outcome here is surely not one in which due to the 
absence of flow control authority local governments are forced, as 
examples, to terminate recycling programs or lay off employees, or 
increase taxes in order to subsidize recycling (in the latter 
situation, the absence of flow control authority is a hidden tax).
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    Finally, and of particular significance, flow control is a stranded 
investment issue (local governments are seeking grandfather legislation 
only--we are not seeking authority for new uses of flow control). The 
need for such grandfather legislation is a matter of basic equity: the 
Carbone decision changed the rules ``in the middle of the game'' and 
grandfathering legislation that provides a reasonable transition is 
essential. It must be emphasized that the situation confronting local 
governments as a result of Carbone is indistinguishable from the 
circumstances electric utilities face as a result of industry 
restructuring. The bipartisan electric utility restructuring 
legislation that has already been introduced in Congress (as well as 
additional legislative proposals that are anticipated) provide (or are 
expected to provide) reasonable assurance that utilities will be able 
to recover stranded investment that is a consequence of industry 
restructuring. In addition, at least eight States have already adopted 
legislation that accomplishes the same result. No electric utility will 
be required to sustain a bond downgrade, or worst yet a bond default, 
as a condition precedent to legislative protection that allows electric 
utilities to recover their stranded investment. Local government is 
equally deserving of protection on the same basis--that is, without 
being forced to sustain even more bond downgrades and bond defaults.\3\
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    \3\ Needless to say, local government investment in waste 
management infrastructure was taken in direct response to State (and 
Federal) mandates rather than as a type of entrepreneurial activity. 
There can be no justification for protecting investors against market 
risk in the context of electric utility restructuring, while declining 
to protect taxpayers and the public in the flow control context where 
the actions in question were taken in response to governmental mandates 
and for protection of public health and the environment.
---------------------------------------------------------------------------
    ii. various witnesses' criticisms of flow control are unfounded
    As explained above, local government is asking for legislation 
merely to grandfather past uses of flow control authority, and thereby 
allow a reasonable transition to respond to the consequences of the 
Carbone decision. Such legislation is amply justified as a matter of 
equity and independent of the different policy viewpoints--favorable 
and unfavorable--regarding the past use of flow control presented 
during the committee's March 18 hearing. Nevertheless, the criticism of 
flow control offered by witnesses at the hearing is not supported by 
the facts, and we respond to that criticism below.
A. Flow Control Is Not Anti-Competitive
    Several witnesses claimed that flow control is anti-competitive. 
E.g., witnesses Rooney, Broadway and Norquist. These claims are without 
basis. Contrary to the witnesses' assertions, the tipping fees--user 
fees--charged for municipal solid waste management services in 
communities that rely on flow control are based on cost and are often 
the result of competitive bidding in the private marketplace for the 
necessary waste management services. Those fees recover the costs of 
various solid waste management services--recycling, household hazardous 
waste collection, composting, public education, resource recovery 
(waste-to-energy), etc. Moreover, flow control proponents agree that 
such tipping fee-derived revenues should not be used to cross-subsidize 
non-solid waste management services (the flow control legislation 
overwhelmingly approved by the Senate during the last Congress, S. 534, 
expressly so provided with the full agreement of flow control 
proponents).
    Nor is flow control anti-private enterprise. To the contrary, 
communities that rely on flow control also rely to the maximum extent 
possible on private enterprise for their waste management 
infrastructure. The difference is that flow control allows the affected 
communities to achieve long-term cost stability for waste management 
services and significantly less exposure to the vagaries of the 
marketplace. See n.6, below. The members of the Coalition submitting 
this statement are a case in point. The clear majority of the 
recycling/waste management facilities with respect to which our members 
exercise flow control authority are privately owned and/or operated. 
For example, the integrated waste management system that serves the 
city of Indianapolis consists of a waste-to-energy plant, an ash 
monofill, a composting facility, a materials recovery (recycling) 
facility, three transfer stations and a landfill. All of these 
facilities are privately owned and operated with the exception of the 
ash monofill, which is publicly owned and privately operated. National 
trends are fully consistent. In fact, as the U.S. Environmental 
Protection Agency has recently emphasized, ``it is noteworthy that the 
private sector has an ownership or operational role for 84 percent of 
WTE [waste-to-energy] throughput, including most of the larger WTEs.'' 
See U.S. Environmental Protection Agency, Report to Congress on Flow 
Control and Municipal Solid Waste, EPA 530-R-95-009 (March 1995, at 
III-58) (cited below as ``Report to Congress on Flow Control''). State 
and regional statistics show the same pattern. For example, the 
Pennsylvania Waste Industries Association, which represents private 
companies engaged in the operation of landfills, transportation of 
solid waste, recycling and related services, estimated in 1995 that its 
members provide 75 percent of all of the municipal waste processing and 
disposal services within Pennsylvania. A key factor here has been 
complementary public-private relationships for which flow control is a 
principal component.\4\
---------------------------------------------------------------------------
    \4\ See, Report to Congress on Flow Control at III-58: Some of the 
largest WTE facilities represent public-private partnerships. Without 
the involvement and support of the public sector, this market segment 
would be much smaller.
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    It also bears emphasis that the local governments that rely on flow 
control adhere to competitive bidding requirements that make cost a 
prime consideration in selecting among alternative waste management 
facilities or vendors. The fact that some communities that rely on flow 
control authority may have higher tipping fees than certain non-flow 
control communities is the former's own choice (as well as a cost that 
the flow control-reliant community alone will bear), and was made for 
reasons that the affected community and its elected officials 
considered fully justified (e.g. maximize recycling, minimize 
unproductive use of land resources and minimize potential Superfund 
liability). Specifically, their higher fees resulted because the 
community had decided to invest in more costly and capital intensive 
waste management infrastructure, such as advanced materials recovery 
facilities (MRFs) or resource recovery/waste-to-energy facilities.\5\ 
Such facilities cost more--over the short-run--than other alternatives.
---------------------------------------------------------------------------
    \5\ See Report to Congress on Flow Control at ES-7 (``For the 
recycling segment, flow control has been an important factor for MRFs, 
particularly MRFs that require substantial capital investments''). See 
also id. at III-46 and 47 (emphasis supplied):
    ``The use of flow controls to guarantee waste flows to WTE 
facilities is significant; approximately 58 percent of WTE throughput 
(from 61 facilities) is guaranteed by flow control. One reason for this 
high percentage is the substantial debt service entailed by the large 
initial capital investment required to construct WTE facilities 
[footnote omitted]. WTE facility operators and owners need to ensure 
adequate, long-term supplies of waste and operate at high capacity 
utilization rates (e.g., 85 percent) in order to generate sufficient 
tipping fee revenues to meet debt service payments. Data show a strong 
association between magnitude of capital costs and use of flow controls 
by WTEs.''
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B. Flow Control Does Not Cost More
    Nor does flow control ``artificially'' increase prices or impose a 
higher cost for a given category of service. In this connection, it 
should be noted that two of the witnesses who opposed flow control at 
the March 18 hearing (Messrs. Broadway and Norquist) referred to a 
study prepared for Browning-Ferris Industries (BFI) by National 
Economic Research Associates (NERA) to support the claim that tipping 
fees are higher for communities that rely on flow control in comparison 
to non-flow control jurisdictions. The BFI-NERA document, however, is 
invalid and laden with distortion that portrays flow control as more 
expensive. It bears emphasis that the State of New Hampshire, 
Department of Environmental Services, evaluated the BFI-NERA document 
and found, contrary to the document's authors, that in two of the three 
case studies presented by BFI-NERA waste disposal at a flow-controlled 
facility is actually less expensive than at competing private 
facilities. The New Hampshire DES' conclusions regarding the BFI-NERA 
document are particularly noteworthy:

          The NERA study is flawed in its assumptions, reported 
        results, and conclusions. Misleading use and reporting of 
        statistics undermines the validity and credibility of the 
        results reported from NERA's economic analysis. In both its 
        modeling and case study analysis, NERA confounds tipping prices 
        with the actual cost of providing MSW disposal, a decision 
        which has the inevitable effect of creating an apparent price 
        advantage for privately operated facilities. Erroneous 
        assumptions about the cost of transporting MSW to alternative 
        disposal facilities unfairly deflate the reported cost of using 
        these facilities. Meanwhile, omitting the cost of integrated 
        waste management service provided by public, flow-controlled 
        facilities unfairly inflates the reported ``tipping fees'' 
        charged by these facilities, and results in a false comparison 
        of disposal costs at the public compared to the private 
        facilities (which offer no such services).  . . .
          The NERA study ignores or misinterprets these critical 
        aspects of solid waste management. In doing so, it vacates any 
        standing it might otherwise claim as a meaningful contribution 
        to the ongoing debate about flow control and broader waste 
        management issues in this country.

Attachment 1, p. 4 (emphasis in original).\6\
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    \6\ As an example of the erroneous nature of the BFI-NERA document, 
no attempt is made to compare tipping fees on a consistent basis; 
instead, spot market tipping fees are apparently averaged together with 
tipping fees under long-term contracts without distinguishing the two. 
The difference between long-term and spot market tipping fees, however, 
is extremely important when analyzing the impact of flow control. In 
fact, a principal reason why local governments rely on flow control is 
to facilitate long-term agreements for the development and financing of 
waste management facilities, as well as to avoid the short-term 
fluctuations--which are at times considerable--in spot market prices. 
The error underlying the BFI-NERA document is perhaps most poignantly 
demonstrated by the claim (at 18) that in Medina, Ohio flow control 
``prevents waste generators from saving approximately $20 per ton.'' To 
make that claim the BFI-NERA document compares the cost of a modern 
recycling facility with the cost of waste disposal at landfills in the 
region. Without belaboring the obvious, it costs more to recycle rather 
than landfill waste, and that has nothing to do with flow control.
---------------------------------------------------------------------------
    Finally, it is true that flow control-based tipping fees often 
recover, in addition to MSW disposal costs, the costs of 
environmentally essential waste management services such as recycling 
and household hazardous waste collection that ``generally do not lend 
themselves to generation of their own revenues''. Report to Congress on 
Flow Control at ES-11. It is particularly important to note in this 
connection, however, that ``[w]hen the tipping fee is broken down into 
its component parts, prices are usually comparable for facilities sited 
in similar locations and built about the same time.'' Id. at 57 (citing 
Moody's Public Finance, Perspective on Solid Waste, August 16, 1993, p. 
3.) \7\ Moreover, the approach of combining the costs of other solid 
waste management programs in a composite fee charged for disposal of 
MSW is fully consistent with well established Federal policy. See U.S. 
EPA, Variable Rates In Solid Waste: Handbook For Solid Waste Officials, 
Volume I--Executive Summary 2, EPA 910/9-90-012a (June 1990) 
(discourages use of general taxes to fund solid waste management 
because no incentive to reduce waste volume is provided and encourages 
volume-based user fees).
---------------------------------------------------------------------------
    \7\ In a typical non-flow jurisdiction, on the other hand, the only 
cost that tipping fees would recover is the cost of disposal, which is 
only a small part of the picture.
---------------------------------------------------------------------------
                            iii. conclusion
    The Coalition appreciates the opportunity to present the foregoing 
views to the Committee on Environment and Public Works. We respectfully 
urge the committee to proceed expeditiously with legislation that will 
grandfather uses of MSW flow control authority in effect prior to the 
Supreme Court's Carbone decision. We pledge our full efforts to work 
with the committee to achieve that objective.

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[GRAPHIC] [TIFF OMITTED] TH072.417

          Statement of the National Coalition for Flow Control
    This statement is submitted by the National Coalition for Flow 
Control \1\ in support of legislation reinstating flow control 
authority for certain State and local governments. Specifically, we 
urge that flow control authority should be authorized for those 
municipal governments that relied on the ability to control the 
disposal of waste within their jurisdiction when committing taxpayer 
dollars to fund waste-to-energy, landfill and related transfer and 
disposal facilities. This limited legislation is necessary to restore a 
measure of control to local authorities who must balance the demands of 
protecting human health and the environment while maintaining their 
ability to borrow money and repay their debts. The Coalition believes 
strongly that such governments should not suffer because the rules of 
the game were changed in midstream.
---------------------------------------------------------------------------
    \1\ The members of the Coalition include Lancaster, Montgomery and 
York counties, Pennsylvania; Atlantic County, New Jersey; the Great 
River Regional Waste Authority, Fort Madison, Iowa; and the City and 
County of Honolulu, Hawaii.
---------------------------------------------------------------------------
    Waste collection has traditionally been a responsibility of local 
governments. Twenty years ago, through the authority of Resource 
Conservation Recovery Act, Congress charged the States with the task of 
developing comprehensive solid waste management plans. Most States 
adopted waste disposal, recycling and minimization requirements. Local 
governments, responding to these mandates, sought long-term solutions 
to the impending waste management problem. Over thirty States adopted 
the use of flow control as a tool to help finance advanced, 
environmentally sound, solid waste management systems. Flow control 
statutes and local ordinances allowed communities to direct where waste 
created within their jurisdiction would be disposed. Prior to the 
Supreme Court's 1994 Carbone decision, the courts had repeatedly upheld 
local government authority to utilize flow control.
    Relying on the enforceability of local flow control laws, 
communities have issued over $20 billion in bonds since 1980 to finance 
the building of modern, efficient, waste management facilities. 
Building these facilities is the best long-range means to serve the 
waste management needs of thousands of communities while adhering to 
environmental standards. Often the revenues from flow controlled waste 
management facilities also support recycling and public education on 
the need for waste management.
    Underpinning the decision to enter the public finance markets and 
borrow significant amounts of money was the certainty that flow control 
authority guaranteed a dedicated stream of waste that made the 
construction of large centralized systems (which benefited from 
economics of scale) economical. Thus communities could adopt a ``user 
fee'' system by which tipping fees at a landfill or waste-to-energy 
plant are borne by the users of the facility. User fees, rather than 
taxes, are regarded as the most equitable way of paying for a facility. 
The Environmental Protection Agency has encouraged this practice as a 
means fairly distributing the cost of reducing total waste and 
encouraging recycling. In further reliance on flow control power, many 
municipalities have signed long-term ``put or pay'' contracts that 
obligate them to supply a certain amount of solid waste to their local 
landfill or incinerator. If they fail to deliver the agreed minimum 
amount, they must pay the difference in tipping fees. With flow 
control, such an outcome was precluded. Without it, municipalities may 
have to pay for trash disposal twice; once where it is actually 
handled, and again pursuant to ``put of pay contracts''.
    Waste authorities throughout the country were dealt a stunning blow 
in May 1994 when the Supreme Court ruled in the Carbone case that flow 
control ordinances were invalid on the ground that, absent 
congressional authorization, they violated the Interstate Commerce 
Clause of the Constitution. The decision destroyed the ability of local 
communities to manage their waste in the manner they deemed most 
effective and threatened their ability to repay their public debt. The 
inequity of this course of action was pointed out by House Speaker 
Gingrich in a recent statement to the National Association of Counties:

          No city or county which has already signed the bonds and has 
        already built and made the investment should be left in the 
        lurch. We should grandfather them and take care of them. We 
        have to learn to make changes in this country in an orderly way 
        where we don't bankrupt people who did everything right under 
        the old rules, and they then have no transition to the new 
        rules.

    Since Carbone, communities throughout the country have suffered 
grave harm. Over $3.3 billion in municipal bonds have been downgraded 
or put on a credit watch since the Carbone decision. The result is that 
these jurisdictions may not be able to access the bond market in the 
future for essential public facilities. If they can obtain debt 
financing, the costs to local taxpayers will be much higher (by as much 
as 10-20 percent, according to the National Association of Counties).
    Some opponents of flow control point out that, contrary to the dire 
predictions, few communities or projects which relied on flow control 
have gone into default. This is misleading. Communities, obviously, do 
not want defaults and have taken drastic measures to avoid them. Some 
are dipping into reserve funds to make up for lost tipping fees. Others 
have instituted employee lay-offs, reductions in services, or have 
raised taxes. While most communities and waste management facilities 
have been able to survive using a combination of these stop-gap 
measures, this should not be construed to mean that they do not need 
flow control. These measures are not long-term solutions to the 
problem. If Congress does not reauthorize flow control more severe 
economic consequences, particularly in the form of increased taxes to 
residential and commercial users, are likely to follow. Here are some 
specific examples of the direct impact of the lack of flow control from 
our membership:
     In Montgomery County, Pennsylvania, in 1989, the solid 
waste authority entered into agreements to build, own and operate a 
state-of-the-art 1,200 ton per day mass burn solid waste facility. In 
order to finance the facility, the Montgomery County Industrial 
Development Authority issued bonds and each of the 24 member 
municipalities agreed to send their waste to the facility. Each passed 
municipal waste flow ordinances which required each municipality to pay 
its share of the total projected waste commitment, regardless of 
whether the waste is actually delivered to the facility.
    The Waste Management System Authority of Eastern Montgomery County, 
Pennsylvania (WSA) issued $107 million in bonds to finance two transfer 
stations and a 1200 ton-per-day resource recovery facility for the 
benefit of its 24 member municipalities. Since the loss of flow 
control, WSA's revenues have fallen $3.8 million, and it expects them 
to fall a further $2.6-2.9 million in 1997. These lost revenues (from 
fewer tipping fees) are being made up out of reserves which may be 
exhausted by the end of this year. Furthermore, WSA stands to lose an 
additional 150,000 tons of commercially generated municipal solid waste 
in 1998, representing an additional loss of over $4 million in revenues 
that must be made up by the municipalities and their residents.
     Since the Carbone decision, Atlantic County, New Jersey, 
has had to eliminate 61 staff positions, and the Authority may have to 
eliminate its recycling, household hazardous waste collection, 
composting, paint recycling, and public education programs. Moody's 
investment service has downgraded Atlantic County's bonds because it 
found the County was ``vulnerable to the loss of legal flow control.''
     In Lancaster County, Pennsylvania, the Solid Waste 
Management Authority serves a population of 450,000 people. After 
incurring over $193 million in debt, the Authority has lost $7.85 
million in fees and has drawn down on their reserves in order to make 
up the lost tipping fees. Both Moody's and Standard & Poor's have 
downgraded their municipal bond ratings, which may not allow them to 
refinance their debt because of a lack of investment quality grade 
bonds.
     Henry, Louisa and Lee Counties in Iowa joined with Hancock 
County, Illinois in May 1992, to form the Great River Regional Waste 
Authority to manage waste from all four counties in an efficient and 
environmentally sound manner. Since the Carbone decision, the Authority 
has been forced to find alternative means to repay the $8.9 million in 
outstanding debt. Now two of the four counties comprising the Authority 
have dropped out, leaving the burden of the debt on the remaining two 
counties. The risk of higher taxes is very real for the remaining 
counties.
     The City and County of Honolulu serves 900,000 customers 
at its waste-to-energy and landfill facilities which began operation in 
1990 and were constructed at a total cost of $280 million. The loss of 
flow control authority makes waste-to-energy facilities less 
sustainable in a small, isolated State which will be more dependent in 
the future on this less land intensive technology.
    There is a simple solution to these problems. The Supreme Court 
ruling emphasized that ``absent congressional authorization'' municipal 
flow control ordinances were invalid. Congress can and should act to 
remedy the situation. Both the 103d and 104th Congresses came close to 
reauthorizing flow control authority. These bills failed in part 
because opponents of flow control cast the debate as anti-free market. 
In fact, less than 20 percent of the municipal solid waste in the 
United States has ever been subject to flow control. The bills also 
suffered due to controversy over the attached Interstate Waste title 
which, although a separate issue, has long been linked to flow control. 
A separate bill which restores flow control authority only to those 
facilities which relied on flow control to finance their waste 
management facilities would be largely free of these concerns.
    The National Coalition for Flow Control urges this committee to 
take action now to protect communities which have built waste 
management facilities and issued bonds in reliance on the law and now 
find themselves facing economic disaster through no fault of their own. 
By adopting legislation similar to S. 534 (104th Congress) the Senate 
will protect taxpayers, residents, permit local governments to meet 
their financial obligations and promote environmentally sound waste 
management practices.
                                 ______
                                 
          Statement of PSA, The Bond Market Trade Association
    PSA, The Bond Market Trade Association is pleased to offer its 
views on recent developments related to flow control and the need for 
congressional attention to the issue. PSA represents securities?firms 
and banks that underwrite, trade and sell debt securities, both 
domestically and internationally. PSA's membership includes nearly all 
major underwriters of and dealers in State and local government bonds. 
Our members have underwritten and currently make markets in all 
outstanding debt which is supported by flow control. We have been 
active in advocating congressional action on the issue for several 
years. We are disappointed that despite numerous attempts, the issue is 
not yet resolved. However, we remain hopeful that problems raised by 
recent developments can be addressed this year. We thank Chairman 
Chafee for convening this hearing and we appreciate the opportunity to 
present our views.
    PSA does not attempt to defend flow control as a policy. Flow 
control has been criticized as anti-competitive and monopolistic, and 
these arguments have some merit. We do not suggest that flow control be 
perpetuated any longer than is absolutely necessary. However, for many 
years flow control was an accepted and widely used practice. Many local 
governments around the country entered into very long-term financing 
arrangements and contracts under the assumption that they would be able 
to practice flow control for at least as long as their exposure under 
these arrangements. Now, of course, these local governments are at 
serious risk. There is a possibility that some, or even many, could 
suffer economically as a result of the loss of flow control authority. 
We believe that Congress has an obligation to provide affected 
localities with very limited flow control authority for a period long--
enough so that those who are facing serious problems as a result of the 
Supreme Court's actions can end the practice of flow control in a 
managed and orderly way. After that, we recognize fully that all flow 
control authority would end forever.
                    flow control and municipal bonds
    As you know, flow control refers to the ability of local 
governments to require that municipal solid waste generated within a 
jurisdiction be processed at a designated disposal site, transfer 
station, recycling facility or other waste processing facility. Flow 
control authority was important to local government solid waste 
programs in part because it made financing for capital facilities 
possible at affordable rates. Flow control authority ensured investors 
and others that a particular facility would generate a sufficient level 
of waste disposal--and would earn sufficient fee revenue from that 
disposal activity--to pay debt service on bonds. With flow control 
authority, a local government was usually able to obtain ``investment 
grade'' ratings from bond rating agencies, ensuring a reasonable cost 
of capital financing. Flow control was also utilized in numerous 
jurisdictions to help ensure the sufficiency of revenue for facilities 
owned or operated by private companies.
    When the U.S. Supreme Court ruled in 1994 on the case of C&A 
Carbone, Inc. v. Town of Clarkstown, N.Y., striking down the policy of 
flow control as unconstitutional, many market analysts predicted 
extremely negative outcomes. A number of outstanding bond issues were 
downgraded by one or more credit rating agencies, indicating that the 
credit quality of outstanding debt supported by flow control had 
deteriorated significantly. Local governments began scrambling to 
explore alternatives to flow control in anticipation of their eventual 
loss of flow control authority.
    Today, nearly 3 years after the Carbone decision, many of the 
pressures that market participants feared have intensified. Many bond 
issues are in technical default.\1\ Credit downgrades continue. 
Investors in flow control bonds have experienced severe deterioration 
in the prices of their portfolios. Communities have begun to tap other 
sources of funds to meet their debt service obligations. All this has 
happened during a time when many local governments are still able to 
enforce flow control ordinances, either because their cases are still 
pending in the judicial system or because courts have granted 
transition periods during which flow control is still permitted. 
Perhaps the most illustrative example is the State of New Jersey.
---------------------------------------------------------------------------
    \1\ ``Technical'' default occurs when a bond issuer fails to comply 
with one or more requirements under a bond indenture, even though the 
issuer remains current on debt service payments. Often, technical 
defaults occur when issuers fail to maintain debt service coverage 
ratios. This is the reason for technica1 defaults on flow control 
bonds. Debt service coverage ratios stipulate that a bond issuer's 
revenue available for debt service must exceed some multiple of the 
actual debt service obligation. For example, a debt service coverage 
ratio of 1.25 means that an issuer's revenue available to pay debt 
service must total at least 125 percent of the debt service actually 
owed. If revenues fall short, the issuer is in technical default.
---------------------------------------------------------------------------
    Some time ago, the State of New Jersey established a goal of self-
sufficiency in its solid waste disposal. This goal was established in 
part because the State had become dependent on out-of-state disposal 
facilities to receive solid waste generated within New Jersey, and 
there was concern that eventually Congress would significantly restrict 
the interstate transportation of municipal solid waste. As a result, at 
the State's direction, many local governments in New Jersey established 
solid waste authorities and issued bonds to build environmentally sound 
local waste disposal facilities, in most cases incinerators. In order 
to cover operation and maintenance expenses and to service the debt 
necessary to design and build these facilities, the per-ton disposal, 
or ``tip,'' fees had to be set at levels considerably higher than at 
alternative disposal sites, which consisted largely of nearby out-of-
state, privately owned and managed landfills. The only way the New 
Jersey facilities could support their above-market fees was through the 
exercise of flow control.
    A Federal court decision last year in Atlantic Coast Demolition & 
Recycling, Inc., et al. v. Board of Chosen Freeholders of Atlantic 
County et al. reaffirmed the Supreme Court's Carbone decision and ruled 
that New Jersey's system of solid waste management is unconstitutional 
because it relies on flow control. The decision gave the State until 
July 1998 to restructure its solid waste disposal system and stop 
practicing flow control. For the time being, New Jersey localities are 
still able to enforce flow control ordinances. However, the court's 
deadline is approaching quickly. The State must establish an 
alternative source of funding to retire the billions of dollars of debt 
that was incurred in order that New Jersey could become self-sufficient 
in its solid waste disposal. One of the approaches under consideration 
would empower local governments to impose ``environmental investment 
charges,'' or garbage taxes, on local businesses. The new taxes could 
be imposed on all residences and businesses that generate solid waste 
to raise sufficient revenue to pay off outstanding debt.
    It is unfortunate and ironic that New Jersey, the State which 
spearheaded the growing trend of cutting burdensome State taxes as a 
way to spur economic development, may have to impose a new tax in order 
to maintain its local governments' payment obligations. It is also 
ironic that the cost of providing solid waste disposal services will 
ultimately be borne by the same citizens and businesses which had been 
paying above-market disposal fees as a result of flow control--under 
the proposal being considered, they will pay the cost as a tax rather 
than as inordinately high tip fees. Ultimately, all the costs of New 
Jersey's investment must be paid. In the absence of flow control and 
under current competitive pressures, New Jersey's disposal facilities 
cannot survive by charging the above-market fees which they have to 
date. Market level fees would not generate sufficient revenue to cover 
operation, maintenance and debt service expenses. The only alternative 
would be for New Jersey's local governments to default on outstanding 
debt. In the mean time, bond investors continue to lose money because 
the considerable uncertainty regarding the outcome of the debate has 
driven down the prices of flow control bonds.
                      congressional action needed
    PSA still believes that the simplest way to address the problems 
associated with the loss of flow control authority is for Congress to 
permit local governments with contracts or debt outstanding to practice 
flow control only long enough to retire their obligations. This 
approach was embodied in compromise flow control legislation which was 
brought before the House of Representatives in the last Congress and, 
unfortunately, did not pass under suspension of the rules. The 
compromise proposal considered in the House in 1995 was the product of 
many hours of discussion among representatives of solid waste disposal 
companies, our industry, representatives of local governments and, of 
course, Members of Congress and their staffs. The compromise 
legislation represented a balanced, measured approach designed to give 
local governments an opportunity to phase out their practice of flow 
control in a reasonable and managed way.
    The compromise acted upon in the House in the last Congress would 
permit local governments with bonds outstanding or ``put-or-pay'' 
contracts in place at the time of the Carbone decision to practice flow 
control only until their obligations were satisfied. It would provide 
no ``prospective'' flow control authority. It would limit the uses of 
revenues generated through the practice of flow control. It would 
prohibit local governments from imposing flow control on classes of 
waste which were not subject to flow control at the time of the Carbone 
decision. In general, it would provide safeguards to ensure that no 
local government abused its limited authority to enforce flow control 
ordinances. This approach has the support of key members of the solid 
waste industry as well as local government representatives and other 
market participants, including PSA. The legislative language acted on 
by the House in 1995 was recently reintroduced by Congressman Bob 
Franks as H.R. 943, the Municipal Solid Waste Flow Control Act of 1997.
                                summary
    PSA is grateful for the effort and attention which Chairman Chafee 
and other members of this committee have paid to the issue of flow 
control over the past several years. We particularly appreciate, for 
example, Chairman Chafee's and Chairman Smith's work in the last 
Congress on S. 534, the Municipal Solid Waste Flow Control Act of 1995, 
which was passed by the Senate 2 years ago. We supported that effort, 
and we were disappointed when the House failed to act on it. However, 
we believe that in the current climate, an approach such as that 
embodied in S. 534 would likely not emerge successfully from the 
legislative process. A more measured approach to the flow control 
problem such as H.R. 943 would provide local governments with the tools 
necessary to address problems raised by the Carbone decision and, we 
believe, would represent more palatable policy.
    Today, local governments find themselves in very difficult 
financial situations over which they have little control. We do not 
seek to perpetuate flow control any longer than is absolutely 
necessary. However, congressional action is needed to ensure an orderly 
transition away from a system based on practice once considered 
perfectly acceptable. We urge the committee to act quickly on flow 
control legislation. We would support a bill which granted local 
governments limited flow control authority tied to outstanding 
obligations such as that provided in H.R. 943. We are grateful for the 
opportunity to present our views, and we would be happy to work with 
members and staff of this committee as the debate over flow control 
legislation progresses.

[GRAPHIC] [TIFF OMITTED] TH072.423

  Statement of Teree Caldwell-Johnson, Chair, Solid Waste Management 
              Committee, American Public Works Association
    Chairman Chafee, Mr. Baucus and Distinguished Members of the Senate 
Environment & Public Works Committee: My name is Teree Caldwell-
Johnson, and I am the County Manager for Polk County, Iowa and the 
former Executive Director of the Des Moines Metro Waste Authority. 
Today I make this statement on behalf of the American Public Works 
Association (APWA). APWA is the largest membership organization of the 
Nation's local public works agencies and professionals who help to 
maintain the nation's infrastructure. Our members have the 
responsibility for applying limited public resources to ensure that the 
roads and bridges we use every day are maintained and safe. We ensure 
that the water you drink is clean and safe, the trash and recyclables 
collected, the landfills maintained the often invisible, but essential, 
services that contribute to quality of life in our cities, counties and 
towns.
    First, I want to thank you, Mr. Chairman, for holding this hearing 
on a subject of critical importance to many communities across the 
Nation. As you know, local government waste flow control has been in 
legal jeopardy since May 1994 when the U.S. Supreme Court, in Carbone 
v. Town of Clarkstown (N.Y.), ruled that a local ordinance that 
required trash haulers to use the town's designated disposal facility 
violated the Commerce Clause of the U.S. Constitution. This decision 
had the effect of changing the rules in the middle of the game. Local 
governments had entered into legally binding flow control arrangements 
prior to the Court's decision, in part to spur recycling, composting 
and other waste reduction activities. They made significant financial 
commitments based on these arrangements, including issuing bonds to 
construct new, technologically advanced, environmentally safe 
facilities. To repay these obligations without flow control authority, 
communities have had to impose tax and fee increases, make staff 
reductions, and impose cutbacks in other programs--all as a result of 
Congress' failure to pass flow control legislation in the nearly 3 
years since Carbone.
    As the body of professionals charged with implementing State and 
Federal laws which require planning for integrated, safe, 
environmentally sound and fiscally viable solid waste management 
systems, the American Public Works Association urges you to take action 
on waste flow control legislation this session. Let me tell you why.
    Members of APWA report to me that, in addition to decreased 
revenues, they are faced with expensive lawsuits or the threat of 
lawsuits by, for example, haulers seeking a refund of the portion of 
tip fees deemed by them to be above the level necessary for the 
operation of the facility--even going back to pre-Carbone days. In at 
least one case, the threat of such a lawsuit was used as a negotiating 
tool in contract negotiations.
    Local governments who responded to the perceived landfill capacity 
shortage a decade back by building state-of-the-art waste-to-energy 
facilities are now faced not only with an inability to repay bonds 
through flow-controlled tip fees, but also with imminent clean air 
retrofits.
    What is the inevitable result to these very real circumstances? I 
foresee a ``Price is Right'' approach to solid waste decisionmaking, 
which discourages long-term environmental and holistic considerations 
in favor of short-term economic expediency. This approach transforms 
the federally recommended solid waste hierarchy (which prefers source 
reduction, minimization and diversion and lists landfilling as a last 
resort) from a cornerstone of integrated solid waste planning to merely 
a ``Figure 3-1 `` in some out of print EPA publication. Members of APWA 
don't want to see that happen.
    If you are wondering why we care, I'll remind you that, unlike the 
private sector, in most areas of the United States, local general 
purpose governments have been charged with ultimate responsibility to 
manage the municipal solid waste generated within their boundaries. 
Some States have codified that responsibility. Other States have vested 
that responsibility with regional or statewide agencies and assigned 
those public entities the responsibility for managing the municipal 
waste generated within boundaries established in the legislation. 
Without flow control, local governments retain the responsibility 
without the authority.
    In order to fulfill their obligation, the planning efforts 
undertaken by the responsible public agencies must consider the 
utilization of all elements of integrated solid waste management. The 
planning program must take into account the environmental, economic and 
political elements of waste management program alternatives including 
the use of various types of public/private cooperative activities and 
the availability of existing facilities and infrastructure.
    Municipal waste management programs, whether they be implemented at 
the local, regional or State levels, start at the storage container 
located in the home, school, office or plant and continue through the 
collection, transportation, processing and final disposal phases. Most 
local municipal programs focus primarily on the residential waste 
stream, with the private sector supplying the services to other 
generators. In some instances, however, the public sector agency 
exercises control over the entire municipal waste stream by providing 
service to all generators through the use of public employees and 
publically owned equipment and/or facilities, through contracting of 
services for all generators or through the licensing of haulers, 
processors and disposers.
    Since the details of each particular program are heavily dependent 
on the demographics, physiographics, financial capabilities and staff 
expertise available in a given area, current programs vary 
significantly in those details. Examples of variation of municipal 
waste management programs being implemented include:
     Public ownership and operation of all required equipment 
and facilities.
     Public ownership and operation of collection equipment and 
contract for private operation of publicly owned transfer, processing 
(materials recovery, composting, waste-to-energy) facilities and/or 
disposal (landfill) facilities.
     Public ownership and operation of collection equipment and 
contract for use of privately owned and operated transfer, processing 
facilities and/or disposal facilities.
     Private ownership and operation of all required equipment 
and facilities through service contract with the public sector.
     Private ownership and operation of all required equipment 
and facilities through direct contracts between the individual 
generator and the private sector supplier.
    A review of these approaches clearly indicates that the 
capabilities of the private sector both environmentally and 
financially--have been and will continue to be integral elements of 
solid waste management programs undertaken by the public sector. Under 
any of the options, however, appropriate Federal and State laws should 
ensure that the environment and public health are protected.
    Regardless of the system employed, the amount of waste handled in 
any single program has a great impact on the economics of that system. 
Larger volumes can provide economy of scale benefits through the 
implementation of area wide programs involving both large and small 
municipalities. Such benefits could have a positive impact on the 
financing of capital costs, on the cost of day to day operations and on 
the more efficient utilization of personnel and equipment. This is 
particularly true today as the environmental sophistication and 
resultant capital and operating costs associated with modern waste 
management equipment and facilities have soared. Therefore, any Federal 
proposal regarding flow control must assess both the retrospective and 
prospective impact of those proposed actions.
    From a retrospective standpoint, many capital-intensive solid waste 
management projects require that local governments deliver a minimum 
amount of waste to a specific facility through binding contractual 
commitments or reliance on existing flow control authority. The owners/
operators of such facilities, whether they are public or private sector 
entities, rely on income to cover development, financing and operating 
costs. The resulting investment losses due to a lack of flow control 
puts the burden on small businesses and taxpayers.
    Because of the need for a bill that will allow affected communities 
to repay their significant outstanding liabilities incurred prior to 
Carbone, we support legislation limited to the objectives of 
``grandfathering'' such pre-existing obligations.
    Thank you.

    [GRAPHIC] [TIFF OMITTED] TH072.426
    
    [GRAPHIC] [TIFF OMITTED] TH072.427
    
       Statement of the Solid Waste Association of North America
    The Solid Waste Association of North America (SWANA) is a non-
profit professional association comprised of approximately 6,400 local 
government and private sector professionals dedicated to advancing the 
practice of environmentally and economically sound municipal solid 
waste management. SWANA's guiding principle is that local governments 
must ultimately be responsible for the management of municipal solid 
waste within their jurisdiction. However, local government need not own 
or operate the system to meet that responsibility. This principle has 
long been recognized by the courts, embodied in the Resource 
Conservation and Recovery Act (RCRA) and incorporated in State solid 
waste laws. In response, local governments invested in solid waste 
management facilities for use by their communities. Most did so at a 
time when private sector alternatives were non-existent. Many local 
governments financed these facilities in good faith reliance on waste 
flow control authority to recover the costs of such investments.
    With the U.S. Supreme Court's decision in C&A Carbone v. Town of 
Clarkstown, New York, 114 S. CT. 1677 (1994), invalidating local 
governments' flow control authority, the rules for local government 
changed leaving stranded the investments they made. These local 
governments are now facing significant hardships as they struggle to 
repay the bonds without flow control authority, ranging from having to 
increase property taxes to a weakened ability to obtain credit in the 
market for funding of other infrastructure projects.
    SWANA believes fairness and the need to restore economic stability 
dictates that Congress should grant those local governments, who were 
left with stranded debt in the wake of the Carbone decision, authority 
to exercise flow control for the limited purpose of repaying their 
outstanding bonded indebtedness. Such legislation would facilitate a 
smooth transition to the post-Carbone era of greater free markets and 
less regulation in the management of municipal solid waste.
               the regulatory framework prior to carbone
    Historically, it has been local government's responsibility to 
protect human health and the environment under State granted police 
powers. The U.S. Supreme Court has long recognized that local 
government management of municipal solid waste, or local government 
supervision of private service contractors providing this service, is a 
valid exercise of these police powers. See, e.g., California Reduction 
Co. v. Sanitary Reduction Works of San Francisco, 199 U.S. 306 (1905). 
The public has relied on local governments to manage for the collection 
and disposal of municipal solid waste and it will undoubtedly continue 
to rely on local governments to ensure that its wastes will be disposed 
of in a manner which protects the general welfare.
    Congress recognized this traditional role of local governments when 
it passed RCRA in 1976. Under the Act, States and their local 
governments were directed to close open dumps and develop and implement 
long term plans for the management of solid waste generated within 
their respective boundaries. RCRA encouraged resource recycling 
including converting waste to energy. The US Environmental Protection 
Agency (EPA) adopted a national policy, reflecting what many States and 
local governments were already doing in the wake of RCRA, which 
established a hierarchy for municipal solid waste management. The 
hierarchy encouraged integrated solid waste management by which 
programs for waste reduction should be implemented first, followed by 
composting and recycling, energy production from waste, and landfilling 
the remaining wastes only as the last resort. In response to these 
Federal mandates and policies, consequent State mandates (including 
mandatory recycling/diversion levels), and, at the time, an absence of 
mature private sector alternatives, many local governments financed the 
construction and operation of integrated systems of waste management 
facilities and programs--such as waste reduction, composting, and 
household hazardous waste collection among others--to ensure that there 
would be long term capacity for managing municipal solid waste.
    In order to generate the capital necessary to finance the solid 
waste management facilities, most local governments issued municipal 
bonds in an amount that has been estimated at $20 Billion nationwide. 
These bonds were issued on the premise that local governments could 
regulate the flow of solid waste to the facilities so that tipping fees 
could be assessed to generate sufficient revenues to repay the bonds. 
In part, local governments relied on certain provisions in RCRA which 
indicated that Congress expected local governments to implement some 
form of flow control. (See, e.g., 42 USC Sec. 6943(a)(5) (not 
prohibiting local governments from negotiating and entering into long-
term contracts for the supply of solid waste to resource recovery 
facilities), and 42 USC Sec. 6948(d)(3)(C) (endorsing creation of local 
government authorities having the power to secure the supply of waste 
to a project)).
    (Typically, the local governments set tipping fees to recover costs 
of the integrated system and assessed those fees at one designated 
facility within the system. If the designated facility was a waste-to-
energy (WTE) plant or a landfill, this approach to assessing ``system'' 
tipping fees allowed other WTE plant or landfill owners, who needed to 
recover only the cost of their specific facility, to argue that their 
tipping fees were considerably lower. This difference in tipping fees 
at comparable facilities has been used to argue that flow control 
results in greater disposal costs. However, this argument, although 
accepted by many as true, unfairly ignores that it is clearly based on 
an ``apples to oranges'' comparison.)
    In exercising flow control, local governments also relied on 90 
years of Federal court decisions, beginning with the California 
Reduction case, that rejected private waste companies' challenges to 
local government control over solid waste based on antitrust, property 
``takings'' and interstate commerce discrimination arguments. 
Specifically, in the decade following adoption of RCRA, Federal courts 
in New Jersey, Ohio and Delaware each found flow control regimes to not 
violate the Constitution's Commerce Clause. During this same period, 
the private solid waste management industry reached maturity, large 
private regional landfills were constructed, and commerce in solid 
waste became a billion dollar business. By the early 1990's, the tide 
in the courts turned against local governments' exercise of flow 
control culminating with the Supreme Court's decision in Carbone. 
Today, it appears that the Federal policy favoring integrated systems 
of solid waste facilities is being replaced by an emphasis on the 
cheapest disposal option: large regional landfills benefiting from 
economies of scale. To this extent, compliance with the Federal solid 
waste hierarchy is jeopardized.
              stranded investments in the wake of carbone
    What is currently occurring to many local governments in the 
aftermath of the Carbone decision is in many ways similar to the 
current struggle to deregulate the electric utility industry. In both 
cases there is a shift from a regulatory regime based on monopolistic 
practices to a highly competitive and deregulated arena. Additionally, 
in both cases, there is significant stranded investment that is created 
by the shift to a free market.
    In the case of electric utility deregulation, the electric 
utilities which were relied upon to make investments to ensure an ample 
power supply to their customers, are now not assured that these 
customers will remain to help repay the investments since they are free 
to shop for other electricity providers. Accordingly, to avoid severe 
and disruptive economic consequences, Federal and State regulators and 
policymakers have authorized the utilities to require these customers 
to assist in repaying the utilities' existing debts over a reasonable 
amount of time.
    The concept of protecting stranded investments makes sense for 
several reasons. First of all it appeals to a sense of fair play. Those 
investments were made in good faith under the State and Federal 
regulatory regime that was in effect at the time. Second, allowing 
recovery of stranded investments, provides a smooth transition for 
these existing facilities to operate in a market place with changed 
ground rules. Third, spreading these stranded investments over the 
entire customer base results in an equitable and least painful 
allocation of costs, so no single party bears an undue share. Finally, 
the recovery period is temporary and is restricted to a reasonable 
period of time. Eventually these investments will be paid off and the 
need for protection will end.
    SWANA believes that the same rationale which has been applied to 
the electric utility sector to allow recovery of stranded costs, should 
be applied to local governments that relied on flow control ordinances 
to finance investments in solid waste management facilities. Those 
local governments that, prior to the Carbone decision, issued bonds for 
such investments should be allowed to repay those bonds over the 
remaining bond financing period by using waste flow control. SWANA 
supports Federal legislation which would authorize these local 
governments to exercise flow control for this limited purpose and 
limited duration.
                       why congress needs to act
    In the Carbone decision, Congress was invited to enact legislation 
to clearly indicate that States and local governments could exercise 
flow control. However, Congress' failure to do so in the 3 years since 
Carbone has resulted in three major credit rating agencies reevaluating 
the credit of the billions of dollars in outstanding municipal waste 
bonds which were issued to finance construction of solid waste 
management facilities. Eighteen of these bonds have been downgraded, 
including several to non-investment grade. For the local governments 
with below investment grade rating, their access to the public market 
to fund capital projects has either been eliminated or greatly 
diminished. For the 21 bond issues that received an unstable credit 
watch, the cost of future borrowing, by the respective local 
governments, will certainly increase.
    Those who believe that these local governments do not need Federal 
legislation authorizing flow control have cited the fact that no local 
government has yet to default on its bonds. However, they fail to 
acknowledge that the local governments have taken drastic and painful 
steps to avoid bond defaults at all costs. These steps have included 
raising property taxes, dipping into other infrastructure accounts, 
cutting of recycling programs and other environmentally sound solid 
waste management services, transferring general fund revenues, and 
laying off scores of employees. Without restoration of flow control 
authority to repay the bonds, additional financial hardships and 
adverse environmental consequences are expected with the potential for 
bond defaults looming larger and larger. We have attached a summary of 
adverse impacts in some of the communities which have been affected by 
the Carbone decision.
    Some have also argued that Federal flow control legislation is not 
needed because some local governments have been able to use alternative 
constitutional means to ensure that solid waste is delivered to the 
facilities financed by the bonds. However, the ability of a specific 
local government to undertake alternatives depends on the scope of 
authority it was granted under State laws. The hodge podge of State 
laws, and the time consuming nature of efforts in the States to provide 
relief to local governments saddled with investments stranded by 
Carbone, underscores the need for timely Federal legislation which 
uniformly restores to those local governments flow control authority to 
repay their debts.
    Congress has cited the need to end litigation as a primary reason 
for its drive to reform the Federal Superfund law. Likewise, Congress 
should end the costly litigation to which local governments that 
previously exercised flow control are now subject, by validating that 
flow control authority through enactment of Federal legislation. Local 
governments and private parties have spent millions of dollars on legal 
fees since the Carbone decision. In addition, in a growing number of 
these lawsuits, punitive damages are being sought from the local 
governments. For Example, Hennipen County, Minnesota has already paid 
$17 million in such damages and faces a potential damage award in 
excess of $154 million.
                               conclusion
    The regulatory regime that local governments operated under prior 
to Carbone was based on Federal and State laws, policies, and court 
decisions which encouraged the use of waste flow control. It is only 
fair that local governments which incurred debt pursuant to the prior 
regulatory regime be given a reasonable period of time to transition to 
the new ``deregulated'' arena and recover that debt. Otherwise, these 
local governments will be subject to significant financial hardships 
and economic dislocations. Accordingly, SWANA urges Congress to act 
responsibly by granting those local governments, who were left with 
stranded debt in the wake of the Carbone decision, authority to 
exercise flow control for the limited purpose of repaying that debt.
[GRAPHIC] [TIFF OMITTED] TH072.431

Statement of George G. Balog, Chair, Urban Affairs Committee, American 
                        Public Works Association
    Chairman Chafee and Distinguished Members of the Committee on 
Environment and Public Works: My name is George G. Balog and I am 
Director of the Baltimore City Department of Public Works, one of the 
largest Public Works Departments in the Country. I am writing in my 
capacity as Chair of the American Public Works Association's (APWA) 
Urban Forum in support of local government authority to control the 
flow of waste.
    The APWA is the largest membership organization of municipal public 
works agencies and private consultants who help maintain the nation's 
infrastructure. Our members are entrusted with use of limited public 
resources to ensure that the roads and bridges we use every day are 
maintained and safe. We ensure that the water you drink is clean and 
safe, that trash and recyclables are collected, the landfills 
maintained--the often invisible services that keep our cities, counties 
and towns running safely and smoothly.
    These invisible services require a huge investment of time, effort 
and funds in order to support the kind of services our citizens have 
come to expect and demand. Nowhere is this more evident than in the 
management of our Solid Waste Stream.
    No longer are we simply ``picking up the trash.'' We have 
incorporated special bulk services, curbside recycling to reduce our 
trash stream, used regional approaches for disposal plants and 
composting facilities, sponsored community cleanups, added an arsenal 
of new equipment and fostered public information campaigns to educate 
and motivate our citizens. With shrinking General Fund budgets, 
innovation is no longer just a dream, its a necessity.
    Our communities are faced with stringent Federal and State 
Environmental Rules and Regulations. In addition, finding appropriate 
markets for recyclables or waste disposal facilities has not been easy 
nor always affordable. Many communities have had to make long-term 
financial commitments in or to facilities which ensure the facilities' 
financial and operational stability. Flow control has been the logical 
outgrowth of such conditions.
    Since the May, 1994 U.S. Supreme Court decision in Carbone v. Town 
of Clarkstown (N.Y.), legally binding flow control and related 
financial arrangements have been thrown into disarray. These 
arrangements were negotiated and entered into in good faith. For many 
local governments, these were the only means available to meet 
environmental standards, goals and their fiscal responsibilities. We 
believe these efforts should be recognized and ``grandfathered'' in 
Federal Flow Control Legislation.
    In the city of Baltimore, we have a carefully managed Solid Waste 
Program that includes: municipal collection of solid waste; a privately 
owned waste-to-energy plant that burns our municipal waste according to 
contract-minimum amounts; a City owned and operated landfill which 
accepts the incinerated waste ash from the waste-to-energy plant as 
well as other public and private wastes; and private companies which 
accept recyclables collected by City forces under competitively bid 
contracts. This balance of public and private cooperation is necessary 
in order to effectively and responsibly manage the 2,600 tons of solid 
waste generated every day in Baltimore City.
    Local governments carry the burden of safe collection and disposal 
of Solid Waste for their communities. It is a task which Public Works 
Departments accept and have been doing quite well for many years. It is 
a sensible arrangement. But over the years, environmental protection 
measures mandated by State and Federal Government--much of which has 
been unfunded--and goal driven programs to reduce waste streams through 
recycling, makes the job of Solid Waste Management more difficult, more 
expensive and more complex.
    While we recognize the unquestionable authority Congress has in 
regulating Interstate Commerce, we in APWA' s Urban Forum would like 
Congress to recognize local governments' unique needs in managing Solid 
Waste. Federal Flow Control Legislation that authorizes local 
governments to designate facilities where locally generated municipal 
solid waste is managed will allow for dependable supplies of waste and 
predictable sources of revenue to make possible reasonable and 
responsible Solid Waste Management Programs.
    We, as Public Works professionals, urge Congress to move quickly 
and positively to pass Federal Flow Control Legislation. Please help 
make local governments' difficult job of Solid Waste Management a more 
reasonable and effective one.
    To that end, I offer the resources of my Agency and my colleagues 
in the APWA Urban Forum to assist in any way we can in this effort.
    Thank you.

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 Statement of Anthony W. Hayes, Director of Public Works, Falmouth, ME
    Chairman Chafee and other distinguished members of the Environment 
and Public Works Committee: I write to you today as a representative of 
a small community which has been adversely and significantly impacted 
by the court ruling in the Carbonne v. Clarkstown case. Communities are 
seen as having a legal responsibility to provide some services to its 
citizens. By law, waste disposal is one of these services. In Carbonne 
the court saw fit to redefine the rules by which municipalities 
interpreted their responsibilities but also saw that there would be 
need for Congress to act to mitigate substantial economic harm to some 
communities.
    Before Carbonne, area wastes were disposed of at a regionally owned 
and operated municipal waste to energy plant with commercial waste fees 
at $65 per ton. Without flow control we were forced to reduce 
commercial fees.
    After Carbonne the same waste is going to the same plant, except at 
a reduced commercial rate of $40 per ton. Residential disposal fees 
have had to increase to $98 per ton to provide sufficient revenue to 
the plant to pay long term debt, operating costs, and for pollution 
upgrades. The losers are the residential customers whose tip fee has 
increased by more than 50 percent. Businesses have seen no reduction in 
waste disposal fees from haulers but have seen higher property taxes in 
the area to help fund residential tip fees which are usually paid for 
with property tax dollars.
    The winners are the waste haulers who have pocketed the tip fee 
savings.
    Almost $3 million per year in disposal fees have been shifted from 
commercial haulers to residential taxpayers. This represents a huge 
windfall for the haulers! No wonder they support the status-quo!
    Municipalities and taxpayers must have relief from the financial 
mess created by a shift in law after the multi-million dollars 
investment.
    While some may feel that the issue of Flow Control has been 
resolved. I am sure you recognize that is not the case. Just because a 
story is not front page news does not mean it is not of great 
significance. Though flow control affects only a portion of the country 
and only some communities, that impact is severe for many. Falmouth's 
waste disposal budget increased by nearly 75 percent. If this were an 
issue impacting all the country, the impact would be more than $2 
billion dollars. Because it does not impact everyone should not be the 
measure of its importance.
    Please return to the near unanimous agreement of several years ago 
and draft limited grandfathering legislation that addresses the needs 
of the significant number of citizens impacted by the law court ruling 
on flow control.
    Thank you for the opportunity to comment on this issue.
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