All Industry Eyes on Dallas Vote to Impose Flow Control

All Industry Eyes on Dallas Vote to Impose Flow Control

Date: September 28, 2011

Source: Waste Business Journal

All Industry Eyes on Dallas Vote to Impose Flow Control

In a move that could have far reaching impacts on the waste industry, the City of Dallas has passed a flow control measure that will require all waste generated in the city to be dumped at the city’s giant McCommas Bluff Landfill or one of the city’s transfer stations. The measure is expected to drive another 900,000 tons of waste per year to the city’s landfill resulting in an additional revenue stream of $ 15 million per year to the city. Other municipalities that own their own waste facilities are watching Dallas closely to see if the model is applicable to them. Meanwhile, the measure will likely be challenged in court by private industry which was opposed to it from the beginning. Leading the charge is The National Solid Wastes Management Association (NSWMA), which represents private waste haulers, which calls flow control a “ghost tax” that will result in $ 19 million in added costs to local businesses and consumers who will see rate increases from haulers that are required to drive much further distances and pay higher tipping fees to use the city’s landfill.

The door to flow control was reopened by the US Supreme Court in April, 2007 when it ruled on United Haulers Association v. Oneida-Herkimer Solid Waste Management Authority in upstate New York. There, the court ruled 6-3, amending its earlier 1994 Carbone ruling which outlawed flow control as an imposition on interstate commerce, by making the distinction between a facility that is publicly owned. The court held that a government could show preference for itself if it served a public good.

However, private haulers represented by NSWMA will likely argue that the public good is not being served in Dallas by flow control and that the burden on commerce will exceed the public benefit.

Meanwhile, the Dallas situation will be more relevant to other large municipalities that own large landfills. Smaller communities, even armed with flow control, will not have the volume to make the economies-of-scale in operating landfills work in their favor. Communities that do not already own a landfill will not want to assume the political liability and huge capital expenditures required to enter the business they have worked to exit in recent years. The tremendous economies-of-scale in operating a landfill requires among other things, control of a relatively large stream of waste in order to operate efficiently and cost-competitively, especially with private industry alternatives.

Moreover, the largest publicly-owned landfills are more often owned by large integrated municipalities which operate so efficiently as not to require flow control or which already exercise a sort of economic flow control. For example, five of the top ten publicly owned landfills are owned by large California counties with integrated waste management systems. Dallas’ McCommas Bluff Landfill ranks as the fourth largest publicly-owned landfill in the US.

The Top Ten Largest Publicly-Owned Landfills in the US

It is more likely that smaller municipalities will consider the use of flow control in order to justify and finance a viable material recovery or advanced energy recovery facility. In these cases, flow control could help them to meet green objectives including recycling goals or simply to qualify for lower financing costs.

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