Down-to-Earth Look at Landfill Markets, A

John T. Aquino

One of the more famous Waste Age covers shows astronauts landing on Mars holding bags of garbage, saying, "We come in peace. Where's your landfill?" Life almost mirrored art two years later when National Aeronautics and Space Administration (NASA) scientists, discussing outer space solid waste management at a 1992 Environmental Industry Associations (EIA) conference, claimed their guiding principle was, "No landfills on Mars."

NASA's recent problems with Mars probes have set the program back, and even before that, Mars-related solid waste management concerns had been put on the back-burner.

Here on earth, analogously, landfills remain the pre-eminent way to manage solid waste. Regulations have made operating landfills safer while forcing thousands of others to close. Consumers and some public entities - such as those in Minnesota - still sometimes threaten to put landfills out of existence, too, as thoughts of them still push not-in-my-backyard (NIMBY) buttons.

We Few, We Happy Few According to a Washington, D.C.-based EIA study, "Solid Waste Disposal Trends: 1999 Update," the number of municipal solid waste (MSW) landfills has declined from the U.S. Environmental Protection Agency (EPA), Washington, D.C., estimate of 20,000 in the 1970s to 7,575 in 1988 (a Government Accounting Office estimate) to an EIA estimate of 2,893 seven years later [see "Solid Waste Disposal Trends," Waste Age April 2000, p.262].

The current estimate is approximately 2,500 landfills - "we few, we happy few," as Shakespeare's Henry V said.

EIA's study indicates that the steepest decline in the number of landfills was prior to 1995 - during the development and eventual release of the Resource Conservation and Recovery Act's (RCRA) Part 258 criteria, also known as Subtitle D. Since 1995, the number has leveled off.

Yet while the number of landfills has declined, individual landfill capacity has increased from 11 years in the late 1980s to 16 years in 1999, according to the EIA study. The report notes that the percentage of solid waste managed by landfilling is 63 percent, but can reach as high as 69 percent.

Bob Gregory, CEO of Texas Disposal Systems, Austin, suggests why. "Recycling has found increased favor in larger metro markets, and nationwide, the recycling rate is 20 percent," he says. "But this has been offset by the rise in the generation of waste. Times are good, so folks are creating more waste, so this has outstripped recycling, even with composting."

In January 2000, for example, the Missouri Department of Natural Resources announced that its diversion from landfill rate declined from 33 percent in 1996 to 27 percent in 1998. The department cited an increase in waste generation, due to a robust economy and depressed markets for recycled material.

Finally, the EIA study reports a shift in landfill ownership over the past 16 years. In 1984, the breakdown was 83 percent public and 17 percent private. In 1998, it was 64 percent public and 36 percent private.

Other studies support this national trend. The specific nature of the decline in the number of landfills and its effect has varied dramatically from state to state. For example, in 1986 there were 300 landfills in New York state; today there are 28, according to "Where Will the Garbage Go?" the annual report by the New York Legislative Commission on Solid Waste Management released in October 1999.

Many of the facilities, according to author Patrick Golden, were small municipal "dumps" that did not comply with the new environmental laws and were forced to close. The survivors are larger, privately owned landfills - largely the result of consolidations. They take in 41 percent of the solid waste generated in the state.

The amount of New York waste exported to other states increased from 17.2 percent to 19.5 percent, according to the state's report. The increase was due, in part, to the increasing diversion of trash from New York City's Fresh Kills landfill on Staten Island, which is due to close in 2001. A January 2000 report from the Congressional Research Service (CRS), an arm of the Library of Congress, Washington, D.C., pegged New York, which sends more than 4.3 million tons of trash out of state, as the largest exporter of solid waste in the country.

A December 1999 report from the Illinois EPA shows fewer and larger landfills in that state. In 1988, according to the General Accounting Office survey, the state had 140 landfills. A decade later, Illinois had 58 landfills, up two from the year before, according to state EPA reports. However, five of those sites took in 41 percent of the state's total waste.

Nationwide, the CRS report notes that imported waste increased from 14.5 million tons in 1993 to 28.4 million tons in 1998 - the result of diminished landfill capacity in areas such as New York, and haulers seeking competitive pricing. The number of small landfills across the country dropped 48 percent during the same five years, the report also states.

Consolidations and Public Protest Another factor affecting landfill markets is the growing consolidation among privately held companies in the solid waste industry. This has led to reports that the larger private companies, which transport waste to their own landfills, would increase prices. The EIA report suggests that the decline in tipping fees nationwide might not continue because of announced fee increases.

Citing this concern, New York's Golden wrote that in Madison County, N.Y., 50 percent of the residential and commercial waste business is controlled by Lexington, Mass.-based Waste Systems International, which has been acquiring small, local haulers.

Waste Connections Inc., headquartered in Roseville, Calif., lists operations in 105 Nebraska towns with revenues of $24 million. The company also owns landfills in David City, Geneva and Milford Nebraska, as well as six Nebraska transfer stations. Waste Management Inc. (WMI), Houston, also has several operations in the state. It owns trash haulers in 17 Nebraska counties, a landfill in Ogallala, and transfer stations in Bridgeport and Gering.

One year ago, there was a community protest in Ogallala about a reported proposal of an 85 percent increase in commercial hauling rates. The increase was pared back when more competition came into the area. In Norfolk and York, Neb., ordinances have been passed to ensure that national companies do not bypass public landfills for company-owned facilities.

Gregory hasn't really seen the effect on consumer prices. "Around Texas, at least, we don't hear anyone complaining," he says. "There are enough municipal landfills around. In Dallas and Fort Worth, for instance, the landfills are owned by municipalities, which dictate the markets. Waste Management and Allied Waste Industries (Scottsdale, Ariz.), are major players but are not able to control the markets."

"I won't say that consolidation hasn't dampened competition a bit," says Jim Warner, executive director of the Lancaster County (Pa.) Southwestern Authority. "But in our location, facilities are 100 percent-owned by the solid waste authority. WMI is always No. 1, Republic Services Inc. (Ft. Lauderdale, Fla.) is No. 2, yet in our market, all haulers, regardless of size, have equal access to our facilities at equal rates."

"There were rumors a few months ago that, as a result of consolidations, there would be a widescale increase in prices - and I heard 85 percent - but I don't think the price increases have prevailed," says John Skinner, CEO of the Solid Waste Association of North America (SWANA), Silver Spring, Md. "The companies have not been able to maintain them. There are too many alternatives available. After having paid so much for acquisitions, this is one of the reasons major solid waste companies are having economic problems."

One major change in public response has been due to how acquisitions take place. Even during the great wave of acquisitions in the early 1990s, companies such as Allied and Superior Services Inc., West Allis, Wis., were careful to downplay the acquisitions publicly. In older Waste Age interviews, for example, these companies' CEOs contrasted themselves with what they called the BFI (Browning-Ferris Industries) acquisition method - where the company would change the local hauler's name to BFI and paint the trucks and signs BFI blue overnight. Acquired companies in the 1990s generally kept their names.

But when large public companies started acquiring or merging with large public companies in the mid-'90s - BFI-Attwoods plc, Eastern Environmental Inc.-WMI, American Disposal Services Inc.-Allied, USA Waste Inc.-WMI - stockholders, the general press and the public were well aware of it.

Another public demonstration of consolidation is the relatively new phenomenon of asset swaps. Sometimes the swaps are required as part of the Department of Justice antitrust review of the merger or purchase. More often, they are the result of consolidations as companies attempt to solidify their positions in specific markets.

BFI and WMI set the precedent in 1998 when they "swapped" hauling operations and one landfill in 13 locations around the country. Since then, there have been others, most recently between WMI and Allied in the Kansas market.

These and other displays of a solid waste company's presence have engendered public reaction. For example, recycling is popular, says Chaz Miller, EIA director of state programs, noting that some companies support recycling only for that reason. Meantime, municipal recycling facilities, such as the one in O'Neill, Neb., are struggling as private companies bypass them for their own facilities, which increases the public facility's debt.

SWANA's Skinner adds that, as a result of consolidation-inspired divestitures, private companies will consider closing unprofitable facilities such as materials recovery facilities (MRFs).

When WMI announced in 1998 that it would be shipping New York City waste (once headed to Fresh Kills) to Virginia landfills by barge, this brought back memories of the infamous 1987 Mobro waste barge looking for a home for its New York waste. The waste was headed to Virginia, which, according to CRS, is the No. 2 state in receiving waste exports, mostly from New York. As a result, opponents stood at the site where Patrick Henry had shouted "Give me liberty or give me death." They vowed to fight the plans to barge the waste from New York - a fight that led to Virginia legislation and court battles.

In March 2000, an Iowa lawmaker introduced an unsuccessful proposal to ban all landfills in the state by 2005, in reaction to a proposal to site a landfill near Cedar Rapids. Last fall, the Minnesota Office of Environmental Affairs proposed a ban on landfilling all municipal waste by 2006, noting, as Golden and Gregory have observed, that while the state's recycling rate rose, residents and businesses generated more waste. Minnesota's recycling rate currently is 46 percent, but waste generation rose 29 percent from 1992 to 1998 while the population increased only 5 percent. In January 2000, the state modified the proposal to a ban on landfilling unprocessed waste after 2008. Hearings on the proposal have yet to be held.

"Landfills are always going to push the public's buttons," one waste hauler told Waste Age. "But with Subtitle D addressing environmental concerns, landfill operators being upfront and open with the public, and recycling losing its steam, landfills will stay at 60 percent."

The EIA report predicts that, "[T]he leveling off [in the decline of] the number of landfills should continue in the future unless major regulations are adopted at the national level."

Is the Future Now? Clearly, landfill markets are related to interstate municipal solid waste shipments, which have been growing in recent years. Congressional action to allow limits on the amount of waste that can cross state lines almost passed in 1995. This year, three interstate bills that would variously limit interstate waste transport were introduced in the Senate and one in the House. At press time, there was no significant activity on these bills, and congressional observers - while noting that anything can happen - thought movement was unlikely this year. With congressional elections to be held in November and some key figures retiring from Congress, future prospects for these bills are unknown.

Thus, without legislation or any additional governmental restrictions, the general feeling among solid waste managers is that the present will be the immediate future - especially taking into account increasing waste generation rates, the fact that landfills currently house 60 percent of all solid waste, the leveling off of the decline in the number of landfills and the slowing of rising recycling rates.

Financial analysts suggest that, with larger companies working on their financial situations as a result of previous consolidations, the pace of acquisitions may be cooling.

Private waste companies traditionally have been both customers and competitors of municipalities. But with the prospect of tomorrow being like today, private companies and municipalities will continue to search for ways to work together.

"I see a lot of cooperation, working together," says SWANA's Skinner. "Why, the March cover of Waste Age shows the CEO and COO of Santek, a private company that focuses on privatizing small- to mid-sized, publicly owned solid waste landfills. When you get down to it, every municipal solid waste operation is a mix of private/public to some degree. It's just a question of how much they contract out."

The most dramatic private-public agreement was the sale of the San Diego county solid waste system to Allied Waste in August 1997. Allied bought the county's four landfills, a transfer station, a MRF and all of the rural collection routes.

In a PricewaterhouseCoopers Endowment for the Business of Government January 2000 report, "San Diego County's Innovation Program: Using Competition and a Whole Lot More to Improve Public Services," William B Eimicke wrote, "The sale of the solid waste system relieved the county of an escalating operating loss; provided a substantial cash infusion to balance the budget, fill reserve funds and eliminate deferred maintenance throughout the county government; and provided the venture capital for the rest of the [county's] innovation program. Not only have the benefits of this innovation been sustained, they have increased over time - [creating] a composite grade of A for the solid waste privatization."

San Diego county's situation has had other effects. Allied reportedly has entered into private agreements with local area haulers for prices lower than those posted. In response, the city of San Diego signed five-year put-or-pay agreements with WMI and Edco Disposal that commit to a combined 300,000 tons per year at the city's Miramar Landfill at discounted rates. With consolidations, WMI, Allied and Edco collect 95 percent of the commercial waste gathered in San Diego each year, according to the city's department of environmental services.

Saying that Subtitle D has had a positive effect on pricing, SWANA's Skinner notes, "Everyone is sharp and on their toes. You want the field to be competitive. That's what I tell our members: you want to stay competitive, you want to stay in the game."

The regulation that contributed to the decline in the number of municipal solid waste (MSW) landfills was and is Subtitle D. It was proposed by the U.S. Environmental Protection Agency (EPA), Washington, D.C., in August 1988, published in the Federal Register on September 1991 and made effective October 1991, although various deadlines were extended through 1997.

The rules established minimum criteria for location, operation (including daily cover requirements), design (including installation of composite liner and leachate collection systems), groundwater monitoring and corrective action, closure and post-closure care, and financial assurance.

According to Ed Repa, director of environmental programs for the National Solid Wastes Management Association, Washington, D.C., "The dramatic change in the number of landfills in the United States over the last 10 years primarily is attributable to the promulgation and implementation of the federal MSW landfill criteria."

Bob Gregory, CEO of Texas Disposal Systems, Austin, says, "Subtitle D produced a significant reduction in the number of landfills nationwide, created regional and even precinct facilities, and increased the cost and price of landfill disposal."

Some say that claims of the dramatic effect of Subtitle D are an oversimplification and that the results really are part of a decades-long process that began with the creation of the EPA in the 1970s.

"I can't say Subtitle D has had any effect on most landfills in Pennsylvania," says Jim Warner, executive director of the Lancaster County (Pa.) Southwestern Authority. "The Pennsylvania landfill regulations were established in 1988, and the little landfills closed in the mid-1980s, not the 1990s."

"I was with the EPA when Subtitle D was first proposed and then promulgated, and I heard projections about how there were going to be increased costs," adds John Skinner, CEO of the Solid Waste Association of North America, Silver Spring, Md. "But these have not been borne out overall. I have been amazed to hear consistently among haulers that landfill tipping fees regularly are at $20 per ton."

The just-released Environmental Industry Associations study, "Solid Waste Disposal Trends: 1999 Update," shows a significant increase in tipping fees, not allowing for inflation, from 1985 to 1998 but a decrease in the average of late. In 1998, the national average for tipping fees was $31.81, which was down from $32.19 in 1995. There were wide variances in different regions of the country - as low as a $21.02 average in the South Central states and as high as a $66.68 average in Northeast states, down from $73.17 in 1995.

"There are fewer landfills but, on average, the costs are coming down," Repa says.

"I think a lot of different things are happening," adds SWANA's Skinner, "including larger landfills and the effect of synergy, improvement in technologies and, just as important, more experience in handling the technologies."

The story of Subtitle D will continue. In November 1999, the EPA asked for feedback in a mandated, 10th anniversary review of Subtitle D. The review will focus on the need for the criteria, the nature of comments from the public since the rule was issued, and the extent to which the rule overlaps, duplicates, or conflicts with other federal, state or local rules. EPA also issued a separate request for information on landfills recirculating leachate on state-approved, alternative liners and bioreactor projects.

But few expect much to change as a result of this feedback.

"Subtitle D is set. No one's going to take it away. And EPA doesn't have the money to do much with the feedback it gets," says an MSW manager who asked not to be named. "Most of the comments are going to sit in a drawer."

Gregory says, "I think a few easy fixes such as field filtering and paying greater attention to final cover will happen. But bigger things like recirculating leachate - that'll take money, and so it may take time to go into effect."