Dwindling landfill capacity in several northeastern states and relatively low tipping fees for depositing municipal solid waste at landfills in midwestern states have prompted waste exports from the Northeast to the Midwest. In response, Congress is debating whether or not to allow states to ban waste imports or charge higher tipping fees for out-of-state waste than for in-state waste. The need for such restrictions on waste imports hinges on whether or not citizens of states that export waste are made to account for the environmental and other costs of landfill operations that are not reflected in the marketplace. With one possible exception, it appears that they already pay the same external costs of these operations that citizens of waste-importing states pay. Thus restrictions on waste imports are unwarranted and may be unwise, as they would raise the over-all costs of waste disposal in the United States.
Of the 180 million tons of municipal solid waste generated each year in the United States, the National Solid Wastes Management Association (NSWMA) estimates that 8 percent, or approximately 15 million tons, is disposed of in a state other than that in which it is generated. In 1989, NSWMA identified 132 separate, regular movements of waste—99 between contiguous states and 10 between nearby but noncontiguous states. Thus 83 percent of interstate waste shipments move within what NSWMA terms a traditional "wasteshed," while the remaining 17 percent travel between distant states.
In recent years there has been a general movement of trash from the Northeast to the Midwest. In 1989, New York and New Jersey generated 53 percent of all the waste exported to other states. That same year, Ohio and Indiana were two of the largest importers of waste.
The exportation of waste from the Northeast stems in part from the closing of many landfills in New York and New Jersey and from the inability of these states to site new waste management facilities. The trend also reflects the financial impact of a sharp rise in tipping fees—the fees charged for the disposal of waste at landfills—in New York and New Jersey. Between October 1991 and July 1992, the tipping fee at the Fresh Kills landfill, the only landfill in New York City, rose from $80 per ton to $150 per ton. Tipping fees in northern New Jersey have also increased sharply and now range from $100 to $150 per ton.
While tipping fees have risen rapidly in the Northeast, they have remained low in the Midwest. In midwestern states, the greater availability and lower cost of land (among other factors) make the costs of building and operating a landfill relatively inexpensive. Even with transportation costs, it remains cheaper for New York and New Jersey to export their refuse to landfills in Indiana, where the average tipping fee is only $21 per ton, than to dispose of it within their own borders.
State actions and the courts
The Northeast-to-Midwest trend has led some midwestern states to try to ban waste imports, charge higher tipping fees for out-of-state waste than for in-state waste, or otherwise restrict or discourage the importation of waste. In 1988, Michigan allowed its counties to prohibit the disposal of waste generated outside their borders, including waste from out of state. In 1989, Ohio established higher tipping fees for out-of-state waste than for in-state waste. In an attempt to ensure that imported waste is disposed of at licensed disposal facilities, it also required haulers of out-of-state waste to sign forms that give Ohio jurisdiction over their loads. In the same year, Pennsylvania governor Robert Casey issued an executive order that limited the amount of out-of-state waste to 30 percent of the total volume of waste disposed of at Pennsylvania landfills. In 1990, Indiana enacted a law that required haulers of out-of-state waste to carry certification that their cargo included no hazardous or infectious medical waste. The law also required haulers to identify the origin of their loads and to pay tipping fees equal to those charged at the landfill nearest the origin.
Many states' restrictions on waste imports have been struck down by the courts as violations of the Interstate Commerce Clause; most attempts to circumvent the clause have been unsuccessful.
Most of the above actions have been struck down by the courts as violations of the U.S. Constitution's Interstate Commerce Clause. This clause explicitly delegates the power to regulate interstate commerce to Congress. Furthermore, Supreme Court decisions have implied that the power of states to regulate interstate commerce is limited in areas where Congress has neither authorized nor prohibited such commerce. The Court has used the implied limit on such power, which is referred to as the "dormant commerce clause," to overrule many state laws that ban waste imports or establish different fees for out-of-state waste and in-state waste.
In the early 1970s, New Jersey became the first state to enact a ban on the importation of waste. Since 1978, when the Supreme Court overturned the ban in City of Philadelphia v. New Jersey, states that wish to restrict waste imports have tried to circumvent the Interstate Commerce Clause using three avenues left open by the Court. The first avenue is the evenhandedness doctrine. According to this doctrine, a state can regulate an interstate commercial activity in order to address a legitimate local public interest as long as the regulation treats in-state and out-of-state parties to the activity with impartiality and has minimal effects on interstate commerce. The second avenue is public health and safety. The Court has let stand state laws that regulate interstate commerce if public health and safety are at stake. The third avenue is the market participation exception to the interstate commerce clause. Although the Court has ruled that states may not regulate private firms in a market so as to impede interstate commerce, it has upheld the right of states to participate in a market and favor its own citizens in doing so. For example, a state can participate in the market for education and deny residents of other states the use of public schools or charge them higher fees than its own residents.
States' attempts to use the evenhandedness doctrine or public health and safety considerations to regulate the importation of waste have often failed. For example, in Fort Gratiot Sanitary Landfill v. Michigan Department of Natural Resources, the U.S. Supreme Court overturned the law that allowed Michigan counties to reject waste from outside their borders. Although the law treated out-of-state and out-of-county waste evenhandedly, the Court stated that it created too much of an impediment to interstate commerce. In Chemical Waste Management, Inc. v. Hunt, the Court overturned an Alabama statute that cited public health concerns in setting a higher tipping fee for out-of-state hazardous waste than for in-state hazardous waste. It ruled that in-state waste poses the same health problems as out-of-state waste and thus the two should be treated equally.
Some states have been successful in using the market participation exception to restrict the importation of waste. If a state is participating in the market for waste through ownership of landfills rather than simply regulating private firms engaged in waste management activities, it may deny haulers of out-of-state waste access to public landfills or charge these haulers higher fees than haulers of in-state waste. Two important court cases have upheld this position—Lefrancois v. Rhode Island and Swin v. Lycoming County. As expected, some states are using the market participation exception to alter the mix of private and public landfills within their borders. New Mexico, for example, has enacted a moratorium on the construction of new private landfills except under special circumstances. In doing so, it has increased reliance on publicly owned landfills at which out-of-state waste can be restricted.
Congressional response
The desire of states to control the importation of out-of-state waste is reflected in two recent bills—one that was before the House of Representatives in 1992 and one passed in the Senate in the same year. House bill HR 3962, which was introduced by Congressman Rick Boucher of Virginia in 1992 and later incorporated into the House Resource Conservation and Recovery Act (RCRA) reauthorization bill (HR 3865), would give local governments the authority to determine whether landfills in their jurisdictions should be permitted to import waste. The bill would allow facilities that are currently importing waste to continue to do so as long as they meet state and federal environmental standards.
Senate bill S 2877, which was introduced by senators Daniel R. Coats of Indiana and Max Baucus of Montana and passed in the Senate in 1992, allows states to prohibit disposal of out-of-state waste upon receipt of a written request from a local government. The legislation requires local governing bodies to hold public hearings prior to making such a request. It does not bar facilities that received out-of-state waste in 1991 from continuing to accept such waste as long as they meet environmental requirements. At the request of local governments, however, governors can freeze the amount of out-of-state waste at such facilities at the 1991 or 1992 level, whichever is lower. The Coats-Baucus bill grants states that imported more than one million tons of waste in 1991—Pennsylvania, Ohio, Indiana, and Virginia—even greater authority to restrict out-of-state waste.
Without a local request, these states can freeze out-of-state waste levels and limit out-of-state waste to 30 percent of the total amount of waste deposited at landfills within their borders. With a local request, they can ban disposal of out-of-state waste in those areas of a landfill that do not meet state environmental requirements.
Efficient waste disposal and interstate transport
Waste disposal is economically efficient when the parties involved in disposal activities minimize the total social costs of those activities. Social costs are equal to private costs—tipping fees and transportation costs—plus external costs. The latter are the environmental and other costs of waste disposal that are not reflected in the private marketplace. They can include groundwater contamination, noxious odors, truck noise, and traffic congestion in areas surrounding a landfill.
In considering whether states should be allowed to restrict the importation of waste from other states, an important question to be answered is whether those who dispose of waste in a state other than that in which it was generated are currently made to take external costs into account. If not, this may be a rationale for giving states the authority to ban waste imports or to charge higher fees for out-of-state waste than for in-state waste.
EPA's landfill regulations internalize some of the external costs of landfill operations; these costs are reflected in tipping fees paid by waste haulers, including those carrying out-of-state waste.
Because the landfill regulations promulgated by the U.S. Environmental Protection Agency (EPA) internalize at least some of the external costs of landfill operations, it is likely that generators of waste that is disposed of out of state are already bearing such costs. These regulations require owners of landfills to take steps to prevent environmental and public health and safety hazards. These steps include keeping out hazardous wastes, covering each day's waste deposits with dirt or other materials, and monitoring methane gas that builds up in landfills, as well as monitoring groundwater, which may become contaminated if waste is not properly contained. Landfill owners are also required to have the financial ability to cover the costs of properly closing landfills when their capacity is exhausted and monitoring landfills after they are closed. The cost of these and other EPA regulations, with which all operating landfills must comply by September 1993, is reflected in the tipping fees paid by waste haulers, including those carrying out-of-state waste.
Some external costs of waste disposal are not addressed by EPA's landfill regulations. Traffic congestion and truck noise are two such costs. Like other external costs, they should be internalized; but because they are created by all waste haulers, there is no reason why there should be a higher tipping fee for disposal of out-of-state waste than for disposal of in-state waste.
Siting costs and a private market solution
Only one external cost appears to be internalized by some citizens but not by others. Citizens whose waste is disposed of in states other than their own are not bearing the cost associated with the siting of new landfills in those states. This cost is likely to be high as residents generally oppose the construction of landfills in their community. The NIMBY (not-in-my-backyard) syndrome is so pervasive that some observers have coined a new phrase: NOPE—not-on-planet-Earth.
Because the costs of siting a new landfill—which include administrative, time, and legal costs—are borne by the community where the landfill is to be located, some communities may be avoiding the creation of new landfill capacity by relying on landfills in other communities. There is some evidence to suggest that this is the case. Between 1986 and 1991, 130 landfills closed in New York while only 18 opened or were expanded. Over the same time period, only 22 landfills closed in Indiana while 15 opened or were expanded. As the result of a surge in new landfills there in the late 1980s, it has been estimated that Pennsylvania has three times the landfill capacity that it needs to handle its own current volume of waste.
To the extent that states like Indiana and Pennsylvania bear the costs of siting new facilities and states like New York do not, there may be a rationale for landfills in Indiana and Pennsylvania to charge more for out-of-state waste than they charge for in-state waste. However, the Coats-Baucus bill, S 2877, does not allow waste-importing states to discriminate against waste shipments on the basis of their origin.
Thus Indiana, for example, cannot charge more for waste from New York than it does for waste from neighboring states. Other bills, including one introduced in the House of Representatives in 1991 by Congressman Al Swift of Washington, would allow waste-importing states to charge higher fees for waste exported from a state that does not have an EPA-approved solid waste management plan.
In any case, higher fees for out-of-state waste than for in-state waste may be unnecessary because private markets appear to have found a way to address siting costs. Private waste management companies are offering so-called host fees to communities that are willing to accept a new landfill. For example, Chambers Development Company guaranteed Charles City County in Virginia a host fee of at least $1.14 million per year to open a landfill. This fee is generated from a surcharge of $4.40 for each ton of waste deposited in the landfill. Because the surcharge rises as the amount of waste disposed of in the landfill rises, Charles City County could reap as much as $2.3 million per year—nearly $1 million more than the sum generated by the county's annual tax revenues before the landfill opened. In addition to the host fee, Chambers provides free trash disposal to the county and pays a county-hired engineer to inspect the new landfill.
Other communities have been offered different kinds of compensation to open a landfill. In addition to host fees, landfill operators have paid for community centers, given money to local schools, guaranteed the property values of homes near new landfills, and agreed to hire local workers to staff the new landfills. As in the case of Charles City County, the cost of this compensation is incorporated into tipping fees.
Workers at a landfill in Charles City County, Virginia, install synthetic liner material to contain waste. Chambers Development Company, Inc., guaranteed the county a host fee of at least $1.14 million per year to open the landfill. The fee compensates the county for the costs of siting the facility
Impact of restrictions on out-of-state waste
At present there appears to be no reason why states should be allowed to restrict waste imports. Because the external costs of landfill operations are generated by both out-of-state waste and in-state waste, tipping fees for out-of-state waste should be no different than those for in-state waste. Although siting costs are often borne only by the citizens in the communities where landfills are located, this inequity can be righted through host fees.
If, despite the lack of a rationale for restrictions, states that are currently importing waste are allowed to ban waste imports or charge higher fees for out-of-state waste than for in-state waste, the overall cost of waste disposal in the United States would probably rise. In the short run, only the states that export waste would pay higher costs for waste disposal than they do now. In the long run, however, states that import waste would also face higher disposal costs. This is because restrictions on waste imports could halt the construction of large, state-of-the-art, regional landfills, like the Charles City County landfill, that serve a large number of communities. Such landfills must take in enough waste to earn revenues sufficient to cover their operating costs. In many cases, landfills depend on out-of-state waste to remain profitable. If such waste is reduced, generators of in-state waste would likely have to pay a higher tipping fee to cover landfill costs. Ironically, bans on waste imports or higher fees for out-of-state waste than for in-state waste could necessitate the siting of small local landfills in many locations and thus lead to greater siting costs than at present.
Given the probability that restrictions on waste imports would increase overall disposal costs, they should be examined carefully. To internalize the external costs of landfill operations, it may be more prudent to rely on EPA regulation of landfills and private market mechanisms such as host fees than to grant states the authority to prohibit or discriminate against waste imports.
Margaret A. Walls is a fellow in the Energy and Natural Resources Division at Resources for the Future. Barbra L. Marcus was an intern in the division during the fall of 1991 and the summer of 1992. This article is based on research conducted by Walls, Marcus, and research assistant David Edelstein.
A version of this article appeared in print in the January 1993 issue of Resources magazine.
A version of this article appeared in print in the June 1993 issue of Resources magazine.
