THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, June 8, 1995 TAG: 9506070195
SECTION: SUFFOLK SUN PAGE: 06 EDITION: FINAL
TYPE: Guest Column
SOURCE: By ROBERT K. DEAN
LENGTH: Medium: 99 lines
Everyone wants recycling to succeed and our garbage to be managed properly. Also, no one wants to pay more to meet these goals than they have to. Unfortunately, costs for these services are skyrocketing in parts of the Tidewater area served by the Southeastern Public Service Authority, or SPSA. And if the U.S. Congress passes a little-known law concerning ``flow control,'' costs are likely to jump higher and higher.
Flow control is a practice in which a local government or a special authority designates a particular facility where recyclables or trash are to be delivered in the community. In other words, flow control creates monopolies. The U.S. Supreme Court struck down flow control about a year ago, saying it deprived consumers of access to competing services.
SPSA and others want flow control back. Congress, in spite of its reputation for wanting less government, may well pass a law authorizing what the Supreme Court took away. The Senate has passed a bill, and a House subcommittee is looking hard at similar legislation.
In the meantime, SPSA proposed raising the disposal rate in the coming year for the eight communities it serves (including Virginia Beach) from $34 a ton to $48.20 a ton - more than 40 percent. The authority is doing this because without flow control it can't compete with lower-priced, commercial facilities in the region, and it is losing trash from business establishments that private haulers are taking elsewhere. SPSA can raise its prices 40 percent because it has contracts with these eight communities for the residential portion of their trash. Fortunately, Virginia Beach has an agreement that puts a $34.85 cap per ton on our tipping fee through June 30, 1997; after that, the fee increases incrementally to a high of $65.35 in 2015.
Why can't SPSA compete and thereby hold down prices? The director has not answered this question satisfactorily. Normal business practices are to cut costs when revenues are down in order to maintain business. Monopolies don't operate that way; they raise revenue to support their high costs. If a flow-control law is passed, it could forever insulate SPSA from competition. Over time, costs will probably continue to rise.
Flow control is essentially a hidden tax. A recent nationwide study conducted by National Economic Research Associates for a waste services company found that flow control raises landfill disposal prices 33 percent on the average, incinerator fees 23 percent on average, and transfer-station fees 33 percent on average.
Yet flow control adds nothing to environmental protection or recycling. The Environmental Protection Agency reached this conclusion in March in a lengthy study. Protection of health and the environment comes from effective federal, state and local regulations, not from flow control, EPA said. As for recycling, EPA found that only 2.7 percent of the estimated 40 million tons of recyclables collected in the United States are subject to flow control. But so far, most of the recycling in the nation is done without flow control.
Evidence from our own area indicates that recycling costs more under flow control than it does in the free market. In fiscal year 1993-94, SPSA reported that its cost for curbside recycling collection was $150.17 per ton net after sale of recyclables. For nearby Newport News, which is served not by SPSA but by a private company, the cost for curbside recycling during the same period was $105.66 per ton. Virginia has set reasonable recycling goals, which communities can and do achieve in ways other than going through SPSA.
A high recycling rate is good, but generally the costs to collect and separate recyclables are greater than their market value,even with recent improvements that have dramatically boosted the value of used paper and other materials. Strong market demand for recyclable materials is the best way to sustain recycling in the long term. Flow control does nothing to strengthen market demand. Those who say that flow control is needed for recycling and other progressive goals more often than not are exploiting public fervor to support their real objective of maintaining a public-service monopoly.
What else does flow control do? It removes the option of selecting a waste-disposal facility that offers special environmental protection features, special waste-handling procedures or other benefits that many businesses and communities want to protect themselves from potential liability.
The bottom-line problem with flow control is that by raising a community's costs to manage wastes, it detracts from local governments' ability to fund other necessary programs. In an era of tight budgets, spending more on waste services means spending less on police, fire protection, education, recreation or other services.
There are alternatives to flow control. All of them involve competition. For example, if SPSA wants to offer a new service, it should have to compete against commercial services companies in a fair and open bidding process. If SPSA can win as low bidder for, say, a new recycling facility, more power to it. Since we have a highly competitive recycling, hauling and disposal industry in Southeastern Virginia, a fair and open bidding process should ensure a reasonable price for service.
As for current services that SPSA provides, the authority should show clearly how it is working to keep costs in line with revenues as businesses in a competitive environment have to do. This may involve making cuts, painful as they are, or it may involve using market strategies - not monopoly power - to increase revenues. The key is to act in accordance with realities of market competition to keep costs in line and service quality high.
We can have highly effective recycling and safe, effective waste disposal. But we can't afford them unless competition has a chance to thrive. MEMO: Mr. Dean is a member of Virginia Beach City Council.
by CNB