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This Proposal Is Just Garbage
Originally appeared in The Wall Street Journal on Tuesday, May 16, 1995
Today or tomorrow, the Republican-controlled Senate is expected to approve a bill that would
institutionalize one of the worst excesses of the "big government knows best" mentality that has long
dominated Congress. It has to do with something called municipal waste control, and it would impose
a hidden tax on consumers, businesses and municipalities.
At issue is the power of a regional government - typically a county or a regional authority --to mandate
a single location for the disposal of all trash generated within its jurisdiction. By controlling the flow
of waste, the regional government can establish its own protected monopoly, and charge whatever it
wants for garbage disposal.
Many governments use this as a convenient excuse to line their own pockets; in New Jersey, for
example, some regional authorities pass bond issues designed for waste disposal but use most of the
proceeds on high-paid consultants and other "overhead" expenses. As a result, a recent study found
that in New Jersey flow-control areas, disposal costs exceed $100 per ton of garbage -- more than two
and a half times the national average.
The costs of this monopoly arrangement get added onto consumers' bills both directly and indirectly.
In Jersey City, for example, we're forced to spend money on waste disposal that we would rather use
for schools or police.
The Supreme court ruled last year that state governments can't pass waste-control laws unless
Congress specifically authorizes them to do so. That's what Congress is now on the verge of doing,
with the House ready to follow the Senate's lead.
The Senate bill, sponsored by conservative Sen. Robert Smith (R., N.H.), has drawn bipartisan
support. Many Western senators like the measure because it includes and anti-free-market provision
prohibiting the interstate shipment of waste. Many regional governments like the bill because it
perpetuates their monopoly on waste disposal.
Flow control emerged over the past 20 years in response to tightening environmental standards, which
caused many cities and counties to close their old dumps and build expensive new landfills and
incinerators. To pay for these investments, local governments imposed high per-ton tariffs or "tipping
fees" on garbage disposal, and then required that all garbage generated within their boundaries be sent
to those facilities. Now, in the wake of the Supreme Court's ruling, these regional governments are
needlessly warning that they face default on their bonds unless exclusive franchises are protected by
Congress.
This is Chicken Little reasoning. A study performed by KPMG Peat Marwick found that New Jersey
could pay off all of its outstanding solid wasted disposal facility debt at cost of $10.39 - $12.67 per
ton in 10 years, or at a cost of $7.10 - $10.00 per ton in 15 years. These bond amortization costs
would be more than offset by the savings local communities could reap once they are allowed to bid
out their waste-disposal contracts on the open market.
Opposition to waste-flow control comes from a surprising coalition that ranges from the Natural
Resources Defense Council to the National Federation of Independent Businesses to the conservative
Competitive Enterprise Institute. What's brought these diverse groups together?
Business objects to the higher costs paid for waste disposal under flow control - costs that ultimately
are paid for in part by corporate taxes. Environmentalists object to the concept because they're
opposed to the incinerators set up by many flow-control jurisdictions; in fact, the Environmental
Protection Agency has just concluded that flow control provides no environmental benefits. And
conservative groups object to flow control because it represents a statist approach to problems that
would better be left to the markets.
Opponents of flow control argue that the proper governmental role in waste disposal is to regulate the
operation of facilities, not to establish regional and county monopolies. A competitive bidding process
could find more cost-effective solutions to even the smelliest garbage-disposal problems.
Yet Congress appears to be ignoring this free-market chorus in favor of the views of sate and regional
government monopolists. Wasn't this supposed to change after last November's election? Instead of
passing flow-control legislation, Congress should bury it in the trash heap of discarded ideas.
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