7. Biomass: Municipal Solid Waste

B. Waste-to-Energy

The waste-to-energy (WTE) industry has been producing heat and power in the United States for a century. Early facilities were incinerators, used primarily for volume reduction. Many also produced steam heat and power. With the adoption of the Public Utility Regulatory Policies Act of 1978 (PURPA), the market for electricity production became more widespread, offering an additional stream of revenue to keep waste processing fees as low as possible. The disposal of solid waste has been the primary driver of MSW combustion, with electricity generation being an ancillary product. The goal of most MSW combustion is to reduce the volume of waste that must be landfilled. Energy production, including steam and electricity sales, provides added revenues to improve a project's financial picture. Currently, 116 WTE facilities in the United States market energy.

Resource Assessment

The U.S. Environmental Protection Agency (EPA) tracks the flow of MSW. Total MSW generation grew from 88 million tons in 1960 to 206.9 million tons in 1993, a growth rate of 2.6 percent per year. Although much of the increase is the result of population growth, waste generation per person has also grown, from 2.7 pounds in 1960 to 4.4 pounds in 1993; thus, the national increase in MSW generated annually can be attributed almost equally to population growth and to behavior patterns that produce more waste. On the other hand, changing behavior patterns in recent decades appear to be resulting in less waste per person. During the 1960s, MSW volumes grew at a rate of 3.5 percent per year while population grew by 1.2 percent per year; during the 1980s, the growth rates were 2.8 percent and 1.0 percent, respectively.(2)

In 1960, 63 percent of MSW was landfilled, and 31 percent was combusted without energy recovery (Table 8. REA '96). Between 1960 and 1993, the disposal of MSW via combustion without energy recovery declined dramatically, both in absolute terms and as a percentage of total MSW generation. Landfilling in absolute terms and as a percentage of total MSW disposal peaked in the mid-1980s and began declining as landfill siting became more difficult. Over the past 30 years, the most dramatic changes in MSW management have been rapid increases in combustion for energy recovery, composting, and recycling. In addition to the shortage of suitable landfills, the enactment of PURPA, which required utilities to purchase electricity from independent power producersțincluding WTE facilitiesțand additional recycling laws greatly influenced municipalities' waste disposal choices.

In any given year, the amount of MSW available for combustion is a function of the heat value of the waste, the amount produced, and landfilling, recycling, and composting rates. The heat value of a typical pound of MSW is widely estimated to be between 4,500 and 6,000 Btu. The future value of MSW will be influenced by the changing composition of the waste stream. The Office of Technology Assessment (OTA) states:

Data from the EPA and the OTA indicate that the heat value of MSW increased from 3,774 Btu per pound in 1960 to 4,457 Btu per pound in 1980, and an increase to 5,569 Btu per pound is expected by 2000. The expected increase in MSW heat value can be attributed largely to an increased share of paper and paperboard and a reduced share of yard trimmings in the waste stream. Since many paper products are recycled, however, it does not necessarily follow that the heat value of the waste stream available for combustion into energy will increase.

Almost 220 million tons of MSW, with a heat value of approximately 2.4 quadrillion Btu, is projected by the EPA to be produced in 2000 (Figure 9). An EIA sensitivity analysis of different possible scenarios for recycling (including composting) and landfilling provides a range of estimates for the amount of energy that could be derived from WTE resources in the year 2000 (Table 27). Currently, 16 percent, or approximately 328 trillion Btu, of MSW is combusted into energy each year, and 19 percent is recycled. If the EPA's recycling goal of 25 percent by 2000 is met and the current landfill rate of 62 percent remains the same, the energy value of the MSW available for combustion will decline slightly. If the landfill rate declines to 60 percent, the available energy from MSW will increase from 328 trillion Btu to 360 trillion Btu. If the recycling market becomes saturated and the recycling rate drops to 20 percent while the landfill rate drops to 50 percent for one reason or another, energy production from MSW will increase to 730 trillion Btu in 2000.


WTE facilities are designed to burn 24 hours a day, 7 days a week, at high temperatures and a utilization rate or capacity factor around 85 percent.(4) On average, a ton of garbage produces 500 to 600 kilowatthours of electricity, or 4,000 to 6,000 pounds of steam. WTE facilities generally fall into four categories: mass burn, refuse-derived fuel, modular controlled air, and pyrolysis.

WTE combustion is similar to conventional combustion of solid fuels such as coal. The MSW fuel is either burned in its original form with little preprocessing (mass burn) or, after the extraction of recyclable materials, converted to refuse-derived fuel (RDF) for more efficient combustion. The fuel handling equipment, boiler, ash disposal, emissions control, and power plant controls are similar to those for coal-fired power plants. The most important differences between the two arise from the much greater variability of the MSW and its much higher proportion of compounds that adversely affect boiler and emissions control operations. The net effect of the fuel variability is that operating and maintenance costs tend to be high and performance tends to be uneven. The use of RDF instead of unprocessed MSW improves boiler performance, but at a significant fuel preparation cost. Additionally, the low heat content of MSW (roughly one-half that of coal), the high proportion of noncombustible materials, and potentially harmful compounds mean that twice the mass of material must be handled, combusted, and environmentally controlled than with coal. This further increases costs.

The major components of a typical mass burn power plant are shown in Figure 10. In a typical 40-megawatt power plant, the charging chutes of each of the two mass burn boilers receive mixed waste via an overhead crane and bucket. A hydraulic ram pushes the waste onto the sloping grate of the furnace, where it is passed through three zones: drying, combustion, and burnout. Air is injected above and below the grate. The heat transfer surface is located in the waterwalls and convective pass, where superheated steam (900 psi and 830oF) is generated. The steam from the two incinerators is used to drive a 40- megawatt steam turbine generator (the gross capacity is 45.5 megawatts, with 5.5 megawatts used for auxiliary power). Assuming a 24.8-percent moisture content and 4,900 Btu per pound, a 40-megawatt mass burn power plant can consume 1,606 tons of waste per day. The average facility has a thermal efficiency of 20.8 percent and a net heat rate of 16,377 Btu per kilowatthour.

A WTE facility has many environmental controls. Ammonia is injected into the boiler convection pass to control nitrogen oxide emissions. A lime spray dry scrubber removes sulfur dioxide, hydrochloric acid, and other acid gases and a baghouse removes lime solids and fly ash, which may contain heavy metals, dioxins, furans, and other toxic substances. Bottom ash and fly ash are landfilled. Combusting the waste reduces the amount that has to be landfilled by about 90 percent. Thus, WTE facilities may be justified not on electricity generation costs alone but as a means to eliminate a major social problem and a growing expense.

A second type of WTE facility is a modular controlled-air incineration system, generally prefabricated and shipped to the site, with a capacity of less than 50 tons per day. Modular systems feed MSW into a primary chamber where incomplete combustion produces a combustible gas that is burned in a second chamber, usually in conjunction with oil or gas. This technology produces very low particulate emissions, but its low-pressure steam is not suitable for the generation of electricity for sale to utilities.

Refuse-Derived Fuel (RDF) facilities consist of an RDF processing area and an RDF-fired stoker boiler. RDF processing includes flail milling, trommel screening, magnetic separation, and size reduction. The resulting fuel, with a heat content of 5,900 Btu per pound, is transported by conveyor to the power plant, where it is injected by the spreader stroker and combusted in suspension and on the grate. The other parts of the plant are similar to those of a mass burn plant. Assuming a moisture content of 28.2 percent and heat value of 5,663 Btu per pound, a 40-megawatt RDF plant can consume 1,396 tons of fuel per day. The plant has a thermal efficiency of 20.7 percent, gross capacity of 46 megawatts, and a heat rate of 16,464 Btu per kilowatthour.

A fourth WTE technology is pyrolysis. A pyrolysis system decomposes organic waste in a high-temperature, oxygen-deficient chamber. Efforts to continue to commercialize this technology have declined, and operating facilities using this technology have closed down.


Waste-to-energy facilities are very capital-intensive undertakings; in many cases, they are the single most expensive public works project confronting a municipality. Most facilities are developed as a result of an alliance between a developer/vendor and a municipality. Usually, a municipality contracts with a full-service vendor/developer to construct and operate a facility. The facility may be publicly or privately owned. Waste streams may be secured with privatecontracts or flow control contracts. Flow control may be legislated (waste streams directly controlled by local ordinances) or economic (indirectly controlled and financed with local property taxes, levies, or fees on property owners). In recent years, several companies have constructed merchant facilities that are completely or partially independent of a municipality. These are high-risk, high-profit facilities vulnerable to the whims of the market. They must compete on a tipping fee(5) basis with other waste disposal choices and new firms entering the market.

In the WTE field, most vendors also serve as developers and owners/operators of a facility. The industry has consolidated in recent years. This movement to larger diversified companies and a more concentrated industry, both horizontally and vertically, is driven by changing market conditions. Contract negotiations are long and intricate; obtaining proper permits is cumbersome. Siting the facility is controversial and usually requires public participation. Even if a facility does not directly participate in recycling, it must coordinate the size of the facility with anticipated markets for recycling. Methods of obtaining funding have been modified as a result of the Tax Reform Act of 1986, and the recent U.S. Supreme Court flow control decisions have created uncertainty and raised interest rates in the capital markets. Great expertise is required to deal with increasingly stringent environmental regulations covering emissions and ash disposal.

As the industry has become more concentrated, the average size of a facility has increased from 671 tons per day in 1985 to 870 tons per day in 1995 (Figure 11). Although RDF facilities, on average, have increased in size from 1,373 tons per day to 1,555 tons per day during the 10-year period, the average capacity by process type (mass burning, modular, RDF) is not the primary cause of the increase in average capacity for all WTE facilities. The primary factor has been the changing mix of facilities by process type. Mass burn facilities have increased their share of the market at the expense of much smaller modular facilities. Mass burn capacity grew from approximately 16,000 tons per day in 1985 to more than 71,000 tons per day in 1995, increasing its share of the market's capacity from 57 percent to 71 percent during this period (Figure 12). At the same time, modular capacity, as a percent of total market capacity, declined from almost 9 percent to approximately 4 percent.

Another factor that has contributed to the increase in average size of WTE facilities over the past 10 years is the trend toward construction of facilities that generate only electricity, at the expense of facilities that generate only steam. In 1995, an average facility generating only electricity was more than four times the size of a facility generating only steam. Of the 87 facilities in existence in 1995 that came on line after 1985, 58, or two-thirds of them, generate only electricity; another 15 facilities generate steam and electricity. Only 14 of the 87, or 16 percent, of the facilities generate only steam, compared with 57 percent at the end of 1985. During this 10-year period, the total capacity of electricity-only generating facilities grew from less than 15,000 tons per day to almost 74,000 tons per day, increasing its market share from 52 percent to 73 percent (Figure 13). In 1995, steam-only generating capacity accounted for less than 8 percent of the market. Most of the remaining capacity generated both steam and electricity. The guaranteed market for electricity under PURPA is the primary factor influencing the trend toward electricity generation.

Another change in the industry's structure during the past 10 years is the trend toward private rather than public ownership. In 1985, approximately 62 percent of the WTE capacity was publicly owned, compared with approximately 46 percent in 1995 (Figure 14). In 1985, only 8 of the 42 facilities in operation were privately owned; in 1995, 53 of 116 were privately owned. The increase in private ownership after 1985 can be attributed to the Tax Reform Act of 1986. The Act eliminated many of the financial advantages of private ownership, but its flexible grandfathering clauses permitted facilities that were in initial planning stages to qualify under the old, more favorable tax laws. If a private entity was contemplating the construction of a WTE facility, it needed to start the facility promptly. Almost all of the facilities built since the Act was passed have been grandfathered-in under the pre-1986 tax laws.

Historical Status

During the 1970s, the U.S. Navy, Wheelabrator, and Ogden licensed European mass burn technologies. Despite the availability of functional mass burn technology, the EPA funded about 10 other experimental technology developments in RDF combustion and pyrolysis. As a result of PURPA and the energy crisis in 1979, many of those technologies were rushed to market prematurely. Early commercial facilities were characterized by poor performance and overly complex designs; most had closed by 1984, with a total combined loss of over $300 million to investors.

During the same era, the Resource Conservation and Recovery Act of 1976 (RCRA) empowered the EPA to regulate residues from solid waste incinerators. Ambiguous wording limited the application of this law to MSW combustion ash, because MSW was specifically exempted from consideration as a hazardous waste. Thus, there was a question as to whether the ash should be considered exempt from hazardous waste regulation. The issue quickly went to court; however, it was not until 1994 that the U.S. Supreme Court deemed that ash should be exempt from waste regulation under Subtitle C of the RCRA, and that it must be regularly tested to determine if it is hazardous.

Several events in the mid- to late 1980s converged to create an environment conducive to the adoption of modern MSW power technology and the subsequent growth of the industry: environmental concern over landfilling as a safe disposal method, rising tipping fees, PURPA, and the soon-to-expire (or soon-to-be-limited) investment tax credits and tax-free financing for development bond issues. Communities were becoming concerned about the environmental impact of landfills on groundwater. MSW power offered the sole alternative to landfilling at the time, with the additional benefit of producing renewable energy. Throughout the early to mid-1980s, MSW power enjoyed a 10-percent energy investment tax credit and tax-free development bond issues that reduced financing costs. The Tax Reform Act of 1986 eliminated the tax-free status of MSW combustion plants financed with industrial development bonds, their accelerated depreciation, and the 10-percent renewable energy tax credit. Not surprisingly, the number of permits for new facilities peaked at the end of 1986, the last year for facilities to qualify for such benefits. The Act also phased in, to be completed by 1988, reduced State caps on private tax-exempt bonds. At least eight new facilities became operational each year from 1985 through 1991, and there were large annual additions to capacity from 1988 through 1991 (Figure 15).

In the 1990s, the fortunes of MSW power began to change. First, several States and the EPA began to promote recycling rather than combustion. Second, waste import restrictions and flow control legislation enacted by States to secure MSW supplies came under review by the U.S. Supreme Court and were overturned. Congress is currently considering legislation to protect the financial integrity of existing plants using flow control, and to allow States to restrict the flow of waste across State lines. Third, the Court also determined that MSW combustion ash had to be tested for toxicity and, if found toxic, to be disposed of in special, more expensive landfills. Finally, in 1994, the EPA published new proposed air emission rules to cover small MSW combustion facilities. All of these events slowed the growth in MSW developments from 1992 to 1995. Although six new facilities with a combined capacity of 8,030 tons per day came on line in 1994 and 1995, this growth was partially offset by the closing of four facilities that had been combusting 3,800 tons per day. The outlook is unclear.

As of October 1995, there are 116 WTE facilities operating and marketing energy in the United States, with a combined capacity of more than 100,000 tons per day. Seventy-five percent of the facilities and 88 percent of the capacity are located in States east of the Mississippi River (Figure 16). The six States with the largest amount of capacity--Florida, New York, Massachusetts, Pennsylvania, Virginia, and Connecticut--represent almost 60 percent of the total capacity in the Nation. Incinerating waste reduces its volume by approximately 90 percent, preserving scarce landfill space, and landfill space is at a premium in these States because of high water tables or high population densities or for other reasons.

Major Issues Affecting Growth

The primary factors affecting the growth of the WTE industry are alternative uses of MSW (such as recycling, composting, and landfilling), increasingly stringent and more costly environmental standards, the Tax Reform Act of 1986, and the ability to control the flow of waste supplies to particular facilities to ensure efficient operation of the facilities and the timely payment of debt.

Integrated Waste Management

The desire of communities to dispose of their waste in the most cost-effective manner has given rise to the concept of "integrated waste management" or managing waste options (recycling, composting, waste-to-energy, and landfilling) to minimize total cost. Reducing the quantity of materials entering the waste stream in the first place (source reduction) may also be considered an aspect of integrated waste management.

Probably the most significant use of waste that has influenced the amount of waste available for combustion is recycling. More than 140 recycling laws were enacted by 38 States in 1990. Thirty-three States and the District of Columbia have comprehensive recycling laws.(6) Today, 22 percent of the MSW in the country is recycled (including composting).(7) The goal of the EPA is to have at least 25 percent of total U.S. MSW directed to recycling by the year 2000.

Recycling may or may not lessen the energy efficiency of MSW combustion. Recycling of newspapers, other paper, and paperboard reduces both the volume and Btu content of MSW, making it less attractive as a fuel. On the other hand, removing yard trimmings reduces the volume but increases the per-unit energy content of MSW. It also reduces the moisture content of the waste stream, thus improving the overall combustibility of the mix. Furthermore, recycling of glass, aluminum, and other metal noncombustibles reduces the volume of trash while leaving its energy content unaffected, which raises its per-unit energy value.

With the emphasis on integrated waste management today, communities take into account the goals of their recycling programs when planning the size of WTE plants. In other words, planning for WTE facilities increasingly occurs in the context of coordinated recycling, composting, WTE, and landfilling, with projected plant loads designed with the expectation that some MSW will be directed to recycling and composting.

Even optimistic projections for recycling and composting continue to forecast increasing quantities of MSW requiring disposal, either directly to landfills or by combustion. If the EPA goal of 25 percent recycling (including composting) were achieved, at current rates of MSW production, more than 150 million tons of MSW per year(8) would remain for energy conversion or landfilling.

It is also important to recognize that recycling and composting impose costs and are not always the most efficient components of integrated waste management. Recycling incurs financial costs for collection, sorting, and processing; recycling also has environmental consequences, including emissions from collection vehicles and processing centers, and uncertain environmental effects during remanufacturing. Finally, lack of demand in the markets for some recycled materials or limitations in market development could restrict the growth in recycling. Composting also faces obstacles, particularly when specialized composting facilities are used. Although a number of smaller facilities are operating, larger facilities have, so far, been much less successful.

Historically, the largest proportion of waste has been directed to its cheapest method of disposal, landfilling. Much of the recent scare concerning the shortage of landfills has not materialized. The increased recycling and composting rates have extended the life of existing landfill capacity, and court decisions prohibiting States from closing their borders to other States' wastes are the major factors that have alleviated landfill shortages.

Environmental Concerns and Regulations

Generally, WTE facilities are near large sources of MSW and, consequently, near population centers. A barrier to the growth in WTE facilities has been and continues to be problems associated with siting, or the so-called "not in my back yard" (NIMBY) phenomenon. Even in communities that agree to build WTE facilities, finding sites acceptable to nearby residents remains a problem. Objections include exclusion from the decisionmaking process; fears of negative effects on property values and on traffic patterns; concerns about noise, dirt, and danger of truck traffic; expected plant odor; and, in particular, fears of actual or perceived negative health effects.

Health concerns center on both airborne emissions from exhaust stacks and groundwater contamination from landfilled combustion ash. They include fears of harmful health effects, particularly cancer, from emissions of dioxins, furans, arsenic, beryllium, cadmium, chromium, chlorobenzenes, chlorophenols, formaldehyde, polycyclic aromatic hydrocarbons, and polychlorinated biphenyls, as well as more general health concerns about emissions of sulfur and nitrogen oxides, hydrogen chlorides, heavy metals (including lead and mercury), and particulates.

Air pollution control regulations have become increasingly stringent since the early 1970s, requiring municipal waste combustors to make continual technological adjustments. The Clean Air Act of 1970 provided the regulatory groundwork for the 1971 New Source Performance Standards, which regulated particulate emissions and led to the replacement of low-energy wet scrubbers with electrostatic precipitators. The Clean Air Act Amendments of 1990 required the EPA to establish solid waste combustion standards consistent with the maximum achievable control technology (MACT).

The EPA issued proposed standards in September 1994 and expects to issue final standards by the end of 1995. These standards will affect new plants at startup; existing facilities will have to comply within 1 to 3 years. For the first time, Federal limits will be placed on cadmium, lead, mercury, and fugitive dust from ash systems. Dioxin, sulfur dioxide, hydrogen chloride, and particulate matter will be more stringently controlled than under the 1991 Revised New Source Performance Standards. Some facilities will have to replace spray driers and electrostatic precipitators with high-efficiency scrubbers. Those over 250 tons per day will have nitrogen oxide emission limits for the first time. New facilities will be required to have recycling plans, as well as site analyses that include early public involvement.

Concerns about groundwater contamination from landfilled combustion ash have recently been clarified by a May 1994 U.S. Supreme Court decision. The RCRA, enacted in 1976, led to the development of separate regulations for hazardous waste (Subtitle C) and nonhazardous waste (Subtitle D). It had not been clear which set of regulations applied to MSW ash. The issue had been debated at the Federal, State, and local policymaking levels, among municipalities, industry, environmental groups, and in the courts, for approximately 6 years.

The May 1994 U.S. Supreme Court decision ruled that ash from WTE facilities must be regulated as a hazardous waste under Subtitle C of the RCRA and, therefore, tested for toxicity. After a year of testing at all WTE facilities, combustion ash has developed an excellent record of nontoxicity. A key regulation promulgated by the EPA allows WTE facilities to mix fly and bottom ash before testing and disposal. Fly ash, which is captured from stack gases, tested by itself, may have a much higher proportion of heavy metals, polyaromatic hydrocarbons, and dioxins than bottom ash. However, environmentalists may challenge these testing procedures in the future. Although the long-awaited May 1994 Supreme Court decision ruled that combustion ash must be regulated as a hazardous waste, it has had little impact on the industry to date.

In 1991, EPA issued subtitle D regulations setting requirements for MSW landfills (Volume 40 of the Code of Federal Regulations, Part 258). These regulations provide minimum standards for all operating landfills. In States that already have EPA-approved permitting programs, groundwater must meet drinking water standards. In States without EPA-approved programs, landfills must be designed with a synthetic composite liner covering a 2-foot clay liner. All groundwater must be monitored and, if necessary, cleaned to meet acceptable standards. Many States have already implemented these or more stringent standards. States without standards, or with less stringent ones, will have to incorporate the EPA standards to ensure that landfills are operated safely.(9) To the extent that the standards cause the cost of landfilling to rise, more waste will be directed to the WTE industry.

Tax Reform Act of 1986

The 1986 Act modified several decades of earlier tax laws.(10) It lowered the rate of return on capital investments by eliminating the tax credits and lengthening the depreciation schedules on capital investments. In addition, the Act placed allocation caps on tax-free private activity bonds (PABs). Both of these sections have had major impacts on the pattern of growth in the WTE industry. The Act has influenced ownership decisions (private versus public) in the WTE industry and waste disposal choices (capital-intensive WTE versus less capital-intensive options such as landfilling) in the MSW industry as a whole.

The prospect of increased taxes lessens the amount of capital private companies can invest at the outset of a project and still maintain a competitive rate of return on their investment. Reduced up-front capital investment requires the issuance of additional bonds, which must be financed with increased tipping fees. In these circumstances, the more capital-intensive WTE options are at a disadvantage relative to less capital-intensive waste disposal options, such as landfilling.

The Tax Reform Act of 1986 also divided State and local bonds into government bonds and PABs (Table 28). The definition of private activity was changed by further limiting private activity to qualify for issuance of public bonds. Under the Act, a private entity could use no more than 10 percent of the bond proceeds, nor secure more than 10 percent of the bonds with private property or revenues, to maintain the preferred government bond classification and the assurance of tax-exempt status. PABs (bonds that exceed the 10-percent limitation) could maintain tax status provided they were used for qualified investments (such as WTE facilities) and were within the State's volume cap of $50 per capita or $150 million per State, whichever is greater. To the extent that investments in unpopular WTE facilities did not fit under the State cap because of increasing requirements for investments in other environmental infrastructure (solid waste, wastewater treatment, and drinking water facilities), States could choose public ownership of WTE facilities so that they could maintain tax-exempt status.

Facilities completed after the Act became law but prior to March 2, 1986, could still qualify for the pre-tax depreciation schedules and investment tax credits, provided there was a written binding contract between the parties and a commitment of at least $200,000 had been made to finance or construct the facility. (Some States had other criteria for qualifying for treatment under the old tax laws, but the ones mentioned above appear to be the most commonly used.) Almost 90 percent of the municipal bonds issued for solid waste facilities in 1986 were for privately owned facilities, compared with about 50 percent in 1993. The private sector's large share of the market during this period can be partially attributed to accelerated activity aimed at getting projects started so that they could qualify under the more favorable old tax laws. In 1985 alone, permits to construct 42,620 tons per day of new WTE capacity were issued, compared with permits for 53,790 tons per day in all the years prior to 1985. Almost all of the privately owned WTE facilities that have come on line since 1986 have reaped the tax benefits of the old tax laws. The private sector's declining annual share of the market from 1986 to 1993 is probably attributable to the declining opportunities to qualify for the favorable tax benefits.

All in all, the Tax Reform Act of 1986 favored public ownership and less capital-intensive waste disposal options. In the future, to the extent that privately owned facilities are constructed, it is possible that more merchant facilities will be constructed, as opposed to those facilities that are closely affiliated with a municipality. Merchant facilities are potentially high-profit, high-risk facilities that operate purely at the whim of market forces and rely on neither legislated nor economic flow control.

Flow Control and Interstate Movement of MSW

Generally, flow control can be defined as the laws, regulations, and economic incentives or disincentives used by waste managers to direct waste generated in a specific geographic area to a designated landfill, recycling, or WTE facility. In some cases, the waste may be delivered first to a transfer station, then sorted and reshipped. The specific form and mix of controls instituted by State and local governments depend on the objectives desired.

By far the most frequently used rationale for choosing flow control is to ensure the financial viability of a WTE facility by providing a reliable, long-term supply of raw materials. This assures the facility of obtaining revenues from tipping fees (charges for waste disposal at the facility), from the sale of electricity or steam or both, and, in some cases, from the sale of materials for recycling, depending on the type of waste disposal facility designated to receive the waste. This assurance is critical in raising capital to finance the construction of a facility.

Legal and regulatory flow control (legislated) can be implemented in several ways. The municipality may collect and dispose of the waste with government employees and vehicles, contract with private haulers for some portion of the process, or grant permits, licenses, or franchises for the collection, transportation, and disposal of waste only to those entities that deliver the waste to a designated facility. Local laws and ordinances to direct waste flows are usually authorized, required, or supported by State governments.

Economic flow control combines market forces with tools such as subsidies, grants, fees, and taxes to the extent necessary to control waste flows. It attempts to direct the movement of waste without legal or regulatory controls. The distinction between legislated and economic flow control is critical to the development of defense strategies against legal challenges.

Publicly owned WTE facilities and certain privately owned facilities that are affiliated with municipalities can engage in either legislated or economic flow control. By contrast, merchant facilities are independently constructed by entrepreneurs without municipal involvement in guaranteeing waste flows. Merchant facilities usually employ private contracts to secure waste supplies.

From 1990 through 1993, only three non-flow-control facilities became operational, with a total capacity of less than 1,200 tons per day. Two had private contracts. The third, built with city revenues, did not contractually secure waste supplies. During the same period, 21 flow control facilities with almost 27,000 tons per day total capacity became operational. Based on testimony by State and local officials at EPA-sponsored public meetings in late 1993, municipalities overwhelmingly believe that directing the flow of waste to specific facilities helps them achieve recycling goals and meet increasingly stringent environmental standards for waste disposal. Of the 61 commenters, 59 supported flow control as a waste management tool. (Two local governments preferred free markets.)(11)

On May 16, 1994, the U.S. Supreme Court declared unconstitutional a Clarkstown, New York, flow control ordinance on the grounds that it unfairly regulated interstate commerce and, therefore, violated the Commerce Clause of the U.S. Constitution. As a result of this ruling, legislative flow control contracts across the country could be interpreted to be illegal and nonbinding and, therefore, unavailable as a means of securing financing and investment in new and existing capacity. By using its authority to regulate interstate commerce, however, Congress could enact a law authorizing legislated flow control. The 103rd Congress came close to passing legislation authorizing flow control, and the 104th Congress is considering several flow control bills. The Senate has actually passed flow control legislation that would grandfather any community that had used flow control or met other conditions prior to May 15, 1994. This bill would also provide States the authority to limit imports of waste from other States.

If legislated flow control is not authorized by Congress, some States may resort to economic flow control (which is vulnerable to legal challenges as a violation of anti-trust laws) and raising property taxes or other indirect taxes to cover capital costs and to avoid bond downgrading or default. Six solid waste bond issuers have been downgraded and five others have been given a negative outlook by the Standard & Poor's financial rating firm. Several other communities have had their bond ratings downgraded, causing the value of their bonds to decline. Two WTE facilities in Ohio (Columbus and Akron), with 3,000 tons per day combined capacity, have stopped operations because of the inability to control the flow of waste.

In addition to flow control, a U.S. Supreme Court ruling prohibiting waste import restrictions will detrimentally affect the growth of the WTE industry. Like flow control, such restrictions have been declared to violate the Commerce Clause of the Constitution. Given this ruling, and barring any action by Congress to authorize States to restrict import of waste, waste will flow out of many States to the least-cost waste disposal option of landfilling.

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