WRITTEN STATEMENT OF ANTHONY CIOFALO
VICE PRESIDENT, CORPORATE AND GOVERNMENT AFFAIRS
ALLIED WASTE INDUSTRIES
CHAIRMAN, ENVIRONMENTAL INDUSTRY ASSOCIATIONS
PRESENTED TO THE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
MARCH 18, 1997

A. INTRODUCTION

Mr. Chairman, I am speaking today on behalf of the National Solid Wastes Management Association, part of the Environmental Industry Associations, which represents some 2,000 companies across the United States that provide products and services for a better environment. NSWMA members collect and process recyclables; own companies that turn recyclables into new products; own and operate compost facilities; and collect and dispose of municipal and other nonhazardous solid wastes. In these remarks, I will use the term solid waste to refer to this universe of wastes.

NSWMA members range in size from small, "mom and pop shops" with three or four trucks to large corporations with national operations. This industry, like others, is in a period of consolidation; many companies have merged or been acquired. As a result, our association has seen an increase in the number of members that are large, publicly traded, integrated companies -- that is, they provide a menu of hauling, recycling, transfer and disposal services. These companies compete aggressively. But, so do our smaller, independent members, which still account for the majority of our members. Small companies are surviving through service flexibility and responsiveness. In some cases, when a small waste service company is bought or merged into a larger one, the former owner may depart and start yet another hauling or recycling company, and start growing again.

Altogether, the industry that we represent is dynamic, competitive, and customer-oriented. Our members take great pride in their ability to provide efficient, cost-effective, and environmentally protective services.

Almost exactly two years ago, NSWMA came before this committee to address the issue of interstate movement of waste and flow control. Mr. Chairman and members of this panel, today I can repeat to you what we advocated two years ago, because the message has lost none of its force. In fact, it has gained relevance. The message is this: restricted borders have no legitimate place in the management of solid waste. It makes neither economic nor environmental sense to give states the right to keep out other states' solid waste. It makes neither economic nor environmental sense to give communities the right to monopolize the management of solid waste created within their borders. These restrictions and controls are contrary to the trend toward bigger, better, more environmentally sound facilities, and they are contrary to the trend toward more innovative, flexible, waste management technologies and practices.

One of the most visible, important trends in U.S. policy over the past 20 years has been the deregulation of monopolistic industries and the restructuring of these industries into competing, open markets. Banking, natural gas transportation, airlines, telecommunications -- one by one, the market barriers have been dismantled, the providers of products and services turned loose to compete for customers, and consumers given the right to choose their provider. The benefits have been lower prices and greater innovation. Just think of the changes that followed the dismantling of AT&T's monopoly on telephones: today, we have faxes, pagers and cell phones; all manner of identifying, routing and saving calls; E-mail; and so on. Just as important, consumers can purchase only those services that they want and need, knowing for each individual service how much they will pay. Economic deregulation and competition unquestionably offer enormous benefits.

This year, Congress is set to tackle perhaps the greatest monopoly of them all: the $200 billion U.S. electric utility industry. While I am not qualified to comment on the specifics of electricity restructuring, I expect yet another round of significant consumer benefits. But, here is the most important analogy between the waste services industry and the electricity industry: how can it be logical or fair for Congress to contemplate opening from coast to coast the borders of the huge electric utility industry, which has been thoroughly monopolized for decades, and, at the same time, take seriously the desire of a few states to close their borders to solid waste imports, or give special rights to a handful of solid waste service monopolies so that they may continue to use flow control to exploit their customers with hidden taxes for years on end? How can interstate restrictions and flow control serve the needs of citizens and businesses or enhance the viability of the industry that provides efficient, environmentally protective services? How can this be anything but a giant waste of time? For Congress to deregulate electric utilities and reregulate waste movements would be like going into a restaurant, ordering a heart-healthy meal and a club soda, and topping it off with double chocolate layer cake and cookie dough toffee crunch ice cream. It's not what the doctor ordered.

Most of what you are hearing about the alleged need for federal intervention in these issues is being driven by a relatively small group of states and communities. In fact, it is often driven by one level of government wishing to impose its will on another level of government. For example, a state government may wish to stop solid waste imports even when the imports provide economic benefits to local communities in the state. Or, a county government will require flow control against the will of a city, town, or village within that county. There are examples of this in many states, including New York, New Jersey, Pennsylvania, Maryland, and Minnesota.

Throughout the United States, trash is picked up every day. Recyclables are sent to market every week. The job is getting done, and it is getting done without passports, border guards, import taxes, or other restrictions on commerce. The few communities and states that believe they need help really do not need help in this matter. Consumers definitely do not need the kind of "help" being proposed.

Now, I would like to comment more specifically on these matters. I will begin with the interstate movement of solid waste.

B. INTERSTATE MOVEMENT OF NONHAZARDOUS SOLID WASTE

1. Interstate Solid waste Movements Are Part of the Trend Toward Better Waste Management

Nonhazardous solid waste does not cross state borders randomly. It moves through an extensive and intricate web of transactions. This movement is part of a decades-long trend that has created a nationwide solid waste management infrastructure offering multiple options for protection of human health and the environment, conservation of resources, and economic efficiency. Let me explain.

We learned the hard way how dangerous and damaging uncontrolled dumping can be. As part of the nation's environmental awakening, Congress and the states passed laws to improve the management and disposal of wastes. These laws and the regulations that followed gave communities new options such as source reduction, composting, and recycling, and they created a framework of stringent environmental protection for combustion and land disposal facilities.

No longer is it acceptable to dump wastes in the most convenient gully or openly burn trash. Comprehensive federal rules, supplemented in many states by even tougher state standards, require today's municipal solid waste landfills to be carefully sited, designed, built, operated, closed, and cared for decades after closure. Every step in the development process must be planned. The goal is to keep wastes and their byproducts isolated in order to protect groundwater and the surrounding environment.

As a result, we have the best, most highly engineered solid waste landfills in the nation's history. They protect health and the environment -- today and into the future. However, these landfills are expensive to build and operate, so they are built big for economies of scale, that is, to keep costs down. They often serve huge geographic or metropolitan areas. Some can receive several thousand tons of trash each day.

As these large, highly engineered landfills have replaced generally smaller, local and less protective ones, we have seen a drop in the total number of facilities. Indeed, we don't need as many. The U.S. Environmental Protection Agency estimated that the nation had some 20,000 landfills in the late 1970s. In our 1995 survey, we counted fewer than 2,900 landfills taking municipal solid wastes. Still, these facilities provide the nation more than adequate disposal capacity, as I will explain later in these remarks.

The point is that while we still have plenty of municipal solid waste landfills to serve the nation, we have fewer local facilities. Solid wastes must travel farther on average to reach disposal, and that travel can involve crossing state lines.

There are side benefits of today's bigger, better, less numerous landfills. One is that fewer NIMBY siting battles take place. A more important one is that economies of scale, along with competition among facilities, really do keep costs in line. The tipping fee, or disposal fee, at the landfills that our members own and operate averaged just over $30 per ton in 1995, according to our survey data. A ton of trash is more than the average individual creates in a year, by the way. Of course, there is more to waste management than disposal, and household bills will reflect other costs such as hauling and recycling. But, it should be comforting to citizens and businesses to know that competition and economies of scale keep solid waste disposal affordable even as regulations and a commitment to quality by owners and operators keeps it safe and environmentally protective.

We believe the facts show that solid waste landfills offer the public a good deal: environmental protection at reasonable prices.

2. What the Data Show About Interstate Solid Waste Movement

The solid wastes that cross borders today for disposal include not only municipal trash of the sort that we produce at home and in the offices and cafeterias of our businesses, industries and institutions, but also such wastes as construction and demolition debris, automobile salvage residues, combustion ash, and other nonhazardous wastes.

In 1995, the most recent year for which NSWMA collected interstate movement data, we found the following facts:

■About 25 million tons of solid waste crossed state lines for disposal.

■By far the majority of states both exported and imported such wastes. Forty-nine states and the District of Columbia exported some portion of their wastes for disposal in other states. Only New Mexico did not. Forty-five states imported some portion of their solid wastes.

■248 different and regular waste interactions occurred between states. We define an interaction as the movement of solid waste between two states or with one of our neighboring countries as an import or an export.

■Of these interactions, 146 (almost 60 percent) involved movement to neighboring states.

Comparing the total amount of solid wastes disposed in the nation with the amount that moves in interstate commerce shows that only a small fraction actually crosses state lines. According to Chartwell Information Publishers, an independent publishing company that monitors solid waste disposal facilities, the nation annually disposes of about 280 million tons of solid waste in non-captive facilities. By this estimate, less than 9 percent of the total moved across state lines in 1995.

To summarize the data on interstate movement, we can see that only a relatively small amount of solid waste crossed state lines in 1995, and these shipments were headed to facilities that must comply with extensive federal, and in many cases, state regulations to protect health and the environment. Furthermore, most of this interstate movement is occurring between neighboring states.

The picture we see is not a disposal system out of whack, but rather an orderly, efficient and geographically reciprocal management process that works day-in and day-out the same way as other free markets work. It underscores the Founding Fathers' notion of a national economic union -- the United States -- and the constitutional need for a Commerce Clause to protect this most basic and successful democratic vision.

I have explained that interstate movement of wastes is related to the interdependence of states at a time when we have learned to build bigger and better landfills. Now I would like to discuss some additional reasons why interstate waste movements occur and make some related points. But first, permit me to try to defuse this issue a bit. What is it that really bothers opponents of interstate movement of trash? Surely, truck and rail movements of garbage are no more cause for concern than are movements of the raw materials of production -- oil, chemicals, minerals, and the like. For the most part, all types of material travel safely and securely in interstate commerce every day. I suggest that few people would even be able to tell the contents of a long-haul truck transporting solid waste along a highway to its final destination.

And, what about the traffic on the nation's streets and highways? What causes more congestion and produces more air emissions: all of the trash that is moved, or all of the automobiles that we drive? I think the answer is obvious, yet few people seriously advocate banning cars from the roads.

3. Interstate Waste Movements are a Function of Geography

Many U.S. cities are situated on or near state borders. Think of Charlotte, Chicago, Kansas City, New York, Philadelphia, St. Louis, and Washington, DC., to name a few. These cities have spheres of influence that extend in all directions. They have interdependent relationships with their surrounding communities, providing work, entertainment, and other benefits to people who live outside the city limits, including those in the neighboring state. We do not prohibit commerce between cities and their suburbs across state lines. We do not ban commuter traffic between cities and adjacent states. Why should we ban exports of solid waste from these cities into the areas that benefit from the city in so many ways? As I indicated, much of the waste movement across state borders occurs between neighboring states. From my perspective, it makes no more sense to bar interstate movement of solid waste than to bar interstate movement of other kinds of goods. Indeed, my company does not think of waste collection and disposal in terms of "states" -- we plan and operate on the basis of "markets" -- that is, geographic regions that are defined by what makes economic sense.

Philadelphia deserves particular mention on this point. In 1978, the U.S. Supreme Court handed down the landmark decision prohibiting states from trying to interfere with cross-border shipments of trash. That decision stopped New Jersey from banning imports from Philadelphia. Today, the tables are turned, and Pennsylvania is lobbying to close the door on waste imported from New Jersey and other states. Obviously, the citizens of New Jersey won when their state government lost in court 18 years ago. We believe that, like New Jerseyans, Pennsylvanians will benefit equally from open borders.

4. Host Benefits Come From Interstate Movements

Few people think of benefits from imported solid waste, and yet another important reason why waste moves across state lines is because it is invited in. Many communities view waste disposal the same as other industrial activity -- as a source of jobs and income. These communities agree to host a landfill that will import solid waste because they have structured arrangements in which they receive "host benefits" from the incoming waste. The benefits are often calculated as a dollar amount paid on each ton disposed. These benefits have been used to support an enormous range of services such as school programs, senior-citizen programs, emergency services, street improvements, and other important community activities. Let's not forget that every dollar in public funds a community can raise on its own is one less dollar for which it must ask the state or federal government.

The Reason Foundation, a non-profit public policy research and education organization, has studied host benefits at landfills and concluded that, "Top-down siting of facilities simply is not acceptable to local residents. Host-community benefits introduce market-like decision-making processes that allow local citizens to make choices about whether, where, and how a disposal facility is sited." The Reason Foundation reports that six states have legislation to encourage or require compensation and/or citizen participation in siting. Of course, host benefits don't make much sense if waste is not coming from outside the immediate community.

5. Capacity Assurance Has Nothing To Do with Interstate Movements

I want to address a concern about safeguarding the authority of state governments to prescribe how much disposal capacity their communities need to have. Imports of solid waste do not undermine these kinds of state requirements. Communities have the option to add capacity beyond a prescribed amount, if they wish, in order to receive host benefits from waste imports.

Furthermore, survey data shows that imports of solid waste are not depriving states of adequate capacity. According to EIA surveys, the nation had more solid waste disposal capacity in 1995 than it has had in the past 10 years. Fully 38 states reported more than 10 years of disposal capacity in 1995, compared to only 21 states that reported that much in 1992 and 25 in 1986.

Again, what has happened is that new and better solid waste landfills were sited and built -- even in states that were importing solid waste. For example, Pennsylvania is sensitive to imports, yet it increased its statewide landfill capacity from less than five years in 1986 to more than 10 years in 1995. Clearly, solid waste imports have not undermined this state's disposal capacity.

I mentioned earlier that there are different categories of waste that cross borders. Another category that I did not mention, but which also crosses borders, is hazardous waste. If states began closing borders to all sorts of waste, many exporters of hazardous wastes would have to construct new in-state hazardous waste facilities -- not necessarily a popular public process. And, what about radioactive waste? Do states really want to be self-sufficient in managing these kinds of wastes? What about recyclables? Do states want to stop taking advantage of global markets in recyclables and reuse everything that they generate?

When we hear calls for restricted borders in the name of self-sufficiency, we need to pause and reflect on what might happen. A federal right unilaterally to stop waste imports could cause adverse reactions in neighboring states. A state that closes its border to imports could find its exports unwelcome. States could become embroiled in a war of attrition, each cutting off any imports of any type of waste from anywhere else -- and each being forced to manage all of its own.

Waste disposal is no different from any other kind of industrial activity. It requires freedom of commerce. Not every community needs to have its own disposal site when it has access to competing facilities that safely accommodate solid waste regionally.

In summary, only a small amount of solid waste moves between states. The movement is mostly between neighboring states. Solid wastes move for a number of very legitimate reasons, including proximity of disposal sites, lack of immediate local disposal capacity, and economics. As politically inviting as it may be, Congress should not allow states to ban the movement of solid waste any more than it should allow finished goods from one state to be banned from another state.

C. FLOW CONTROL OF SOLID WASTE

1. Flow Control Is Inefficient and Raises Prices

Flow control is an enormously expensive and inefficient way to manage garbage. It creates a monopoly where all local wastes must be sent for recycling or disposal. It insulates the designated facility from competition -- that is, from the need to operate efficiently and with the needs of consumers in mind. As a result, flow control raises prices and hinders innovation, yet it does nothing to advance the goals of integrated waste solutions or protection of public health and the environment. Flow control causes rates for various services to be bundled together so that consumers have no idea how much they are paying for each individual service. They have no way of knowing if they are paying too much or too little, or even whether they are getting the services they want and need. For example, through county-wide flow control, residents in a municipality can end up paying for suburban curbside recycling that does not even serve them. Businesses can end up paying for services they do not use, such as household hazardous waste collection. Subsidies like these in other industries such as telecommunications were among the primary reasons for the movement to deregulate.

Flow control is essentially a hidden tax. Its main purpose is to provide back-door tax revenue to those lucky enough to direct the flow.

2. Both Public and Private Sectors Have Been Harmed by Flow Control

During the years that flow control was in effect, that is, before the U.S. Supreme Court's Carbone decision in 1994 that found it interfered with the constitutional right to interstate commerce, powerful evidence was building of the harm produced by this monopolistic practice. Nor did the evidence come solely from private-sector companies deprived of markets, although that obviously has always been a great concern to us. It came from the public sector as well. We were able to collect testimony from a number of mayors and other public officials who had first-hand experience paying for flow control. (By the way, one of these mayors is now Congressman William Pascrell of New Jersey.) We heard how millions of dollars had to be diverted from municipal budgets to fund overpriced disposal. We heard how these precious dollars might otherwise have supported additional fire protection, police, education and other urgent municipal services. We heard how municipalities were paying for services they did not even receive. Here are examples of the hardships imposed by flow control:

■New Jersey, the most extensively flow-controlled state in the country, also has the nation's highest tipping fees, averaging more than $90, $11 dollars per ton higher than the next highest state average. New Jersey's tipping fees exceed competitive market prices by $110 million per year, according to U.S. District Court Judge Joseph E. Irenas in a ruling against the state's flow control regulations. In other words, New Jersey imposes a $110-million tax on citizens and businesses through the tipping fee.

■The Hudson County Improvement Authority in New Jersey uses flow control to pay off $130 million in bonds for an incinerator that will never be built. The county monopoly spent over $55 million in planning, engineering studies and administrative expenses for a project that was canceled.

■In Hennepin County, Minnesota, where Minneapolis is located, the waste-to-energy plant was charging $95 per ton of waste disposed when the actual cost of operating the facility was $45-50 per ton. Minneapolis officials became so frustrated having to pay what amounted to $4 million in taxes for virtually no benefit that they used the threat of hauling the city's trash out of state to win a lower tipping fee. Of course, without the legal authority of the Carbone decision, Minneapolis would not have had this leverage.

■In Ohio, solid waste districts planned to use flow control and district fees to collect and spend some $1.2 billion for solid waste activities over a nine-year period. Most of those funds would have gone into district-owned or district-operated recycling programs in competition with pre-existing, private-sector recycling operations.

3. Loss of Flow Control Authority Did Not Harm Integrated Waste Management Systems

It is clear that the Carbone ruling was a blessing to towns and cities that felt highjacked by flow control ordinances. It gave them breathing room and, in many cases, leverage to win lower tipping fees. However, Carbone led to many dark and foreboding pronouncements on the part of flow control advocates. Let me cite a few from news reports at the time:

-- "the world of municipal solid waste management is turned upside down."

-- "integrated municipal solid waste management will take a major step back..."

-- "the losers... are likely to be many operators of such environmentally popular options as MRFs, recycling programs, composting facilities and household hazardous waste activities...."

-- "there will be chaos and confusion in the management of municipal solid waste."

I will not bother to debunk in detail all of the exaggerated claims. The common message was that the world as we knew it was about to end -- that flow control was integral to modern, integrated waste management, and without it all of our carefully built programs would unravel. These assertions have since been demolished by research and real-life experience. EPA delivered the mortal blow in a report to Congress two years ago, after 18 months of study. The agency found that public health and environmental regulation, not flow control, protects health and the environment. It found no data to suggest that flow control ensured disposal capacity or was necessary to achieve the goals of source reduction and recycling. In fact, it found that flow control played an altogether limited role in the solid waste market.

A perverse irony of flow control is that it was used in ways that did not benefit the environment. In Rhode Island and Illinois, Superfund sites were designated under flow control mandates. In Ohio, flow control was imposed in a way that would have directed waste away from many facilities meeting Ohio Best Available Technology (BAT) standards and into facilities not meeting those standards. Generators in most Ohio solid waste districts used BAT landfills before designation took effect, yet after the initial designations were made, fewer than half of Ohio's districts had selected BAT-type landfills.

What power does local government have, without flow control, to set goals and enforce standards? Local government can ensure proper management of wastes without having to provide the actual waste service or dictate how the market will work. No one disputes that local government must set housing codes, but this does not mean that government must build the houses. No one disputes that government has a role in protecting public health and safety, but this in no way implies that government must limit the number of hospitals, or flow patients to particular doctors, nurses, and clinics. Flow control is the environmental equivalent of a government-backed monopoly on housing or health care.

4. Flow Control Is Not Necessary To Protect Bond Holders

Today, the primary claim of flow control advocates is not the imminent failure of integrated waste management, but rather the imminent failure of investor-grade ratings on bonds used to finance flow-designated facilities. Bear in mind that we are now nearly three years past Carbone. "Imminent" is not the word that springs to my mind to describe the predicament that faces these former waste monopolies today. What, in fact, has been going on the past 34 months?

According to flow control advocates, Moody's Investors Service has downgraded the bonds of 15 flow control facilities. Yet, all but one downgrade occurred within the first year after Carbone. In other words, in the nearly two years since May 1995, Moody's downgraded only one more facility's bonds.

And, what about the ratings on the bonds to begin with? Most of the downgraded bonds were either A or Baa. They were not triple-A, which is the rating that is given to the most secure investments. Even under flow control, waste facilities had risk. This point was made in the Official Statement from the Mercer County Improvement Authority's 1992 Solid Waste Facility Bond Prospectus. I quote:

"There can be no assurance that in any given Fiscal Year the total tonnage (and/or cubic yardage) of solid waste which is generated within the Region will be equal to or greater than the projected tonnage (and/or cubic yardage) upon which the Authority's Tipping Fees were based...As a result of the following circumstances and other conditions and factors over which the Authority exercises no control, the aggregate revenues received by the Authority from its solid waste operations in a given Fiscal Year may be less than the amounts necessary for the Authority to meet its obligations to pay debt service and maintain reserves with respect to the 1992 Bonds and to pay the Authority's other expenses."

Last September, another bond rating company, Standard & Poor's, issued an update on flow control financing in its municipal edition of CreditWeek. The report put it this way: "Will there be rating upgrades if flow-control ordinances are reinstated through congressional legislation? The answer is no." Let me emphasize that: "The answer is no." S&P makes the point that virtually all facilities that previously benefited from flow control have made the adjustment to a competitive market. In fact, S&P made this point all along. Again, to quote from last September's CreditWeek,

-- "Standard & Poor's has previously stated that few ratings would be affected by the lack of flow control. The relative stability of solid waste system ratings over the past two years has been due in large part to the fact that many have displayed characteristics that insulate them from the loss of flow control."

According to S&P, "one of the primary indications of success in the post-Carbone environment is management's awareness of industry change and its ability to adapt to the business environment." Indications of what S&P calls "strong management" are efforts to maximize alternative revenue streams, cost reductions and contract renegotiations, increased focus on appropriate cost structures, unbundling of rates and services, and reduction of stranded costs.

S&P even announced that it was changing its approach to evaluating solid waste credits to reflect the realities of competition, just as it had done with public power and investor-owned utilities. According to the report, "The deregulation and increased competition facing the public power industry closely parallels the events that have occurred in the solid waste industry." Let's not undo our successes in weaning ourselves from flow control, not when we have shown how to open the doors of competition to the far larger electric utility industry.

5. Flow Control Cannot Guarantee Trash Or Ensure A Successful Operation

As a waste company executive, I believe strongly that the ability to operate in a competitive market is a far greater predictor of business success than a so-called guaranteed flow of business. The reason is that no one can guarantee the workings of a market -- not even a highly monopolized market. The evidence shows that even when the iron jaws of flow control were operating, they could not guarantee that designated waste facilities would always have an adequate supply of trash. For example, it is pretty clear that the explosive rise of curbside recycling and the recession in the early 1990s reduced the amounts of trash that designated waste facilities were counting on. Other disposal facilities that competed in the free market also felt the pinch, but since they were built to compete -- for example, by lowering their prices or improving customer service -- they were far better able to handle the rise and fall of the trash tide.

Evidence also points to some designated facilities' having been oversized to begin with. Apparently, the guarantee of trash gave the designers of these facilities delusions of unlimited business. Even when studies indicated the limits of the local trash supply, they added disposal capacity, hoping somehow to be able to grow into it. This is acceptable when you are competing, not when you are being subsidized.

The dilemma of uncertainty that faces central planners was effectively described in a Feb. 4, 1997 Washington Post article. The article described how a "trash shortage" is playing havoc with municipal budgets in the Washington metropolitan area. Among the reasons for the shortage identified in the article were private-sector landfills that compete on the open market, but also identified were recycling programs and other efforts to reduce trash. The article reported that 12 of 18 members of a Fairfax County, Virginia citizens advisory committee on solid waste quit in January because the county Board of Supervisors ignored warnings years ago that the county would have difficulty repaying the $250 million in bonds it sold to build an incinerator at Lorton. A question asked by one of the remaining advisors who sympathized with the quitters was why the county had gotten into the trash business to begin with. It is a question that I would hope Members of Congress seriously ask. Why not leave the business of managing trash up to the experts?

Inability to meet facility designs with adequate amounts of garbage is an international issue. News reports recently have cited garbage shortages at German incinerators because of recycling and changing waste generation habits.

6. New Jersey Is A Good Example Of Flow Control's Failures

Let's look more closely at one of the states crying the loudest for federal flow control authorization. New Jersey is a state that instituted not only statewide flow control but statewide utility regulation of the waste services industry. What did it accomplish? It managed to force literally hundreds of small waste hauling companies out of business because of complex and expensive transactional costs, thus reducing the number from some 2,500 to slightly more than 600. It managed to make landfills almost impossible to site. It created massive bureaucracies in the form of waste authorities. It produced a system that dictates where all garbage must go for disposal, yet which ironically allows hundreds of thousands of tons to leave the state each year for disposal elsewhere. It produced a system that periodically must offer out-of-state sources of trash cheaper rates for disposal than in-state sources can find. Do not be fooled by claims that New Jersey has used regulation of waste disposal effectively. New Jersey's system is itself wasteful. No wonder the state feels nervous about its reliance on flow control.

Why is it that flow control has been opposed by the New York State Conference of Mayors and Municipal Officials, by a majority of mayors in New Jersey's biggest cities, and by mayors and public works directors in other states? Why has it been opposed by the National Association of Manufacturers, the National Federation of Independent Business, the New Jersey State Chamber of Commerce, the Associated Builders and Contractors, the International Council of Shopping Centers, and other business and industry groups? Why has it been opposed by the Competitive Enterprise Institute, the National Taxpayers Union, and other advocates of better, smaller government? Why has it been opposed by the Sierra Club, the Natural Resources Defense Council and other environmental groups? The answer is that flow control, any way you look at it, simply is not good government. It interferes with the objectives of an enormous range of interests. Not many issues manage to annoy so many.

The cry for help on flow control is coming from a very few sources who happen to cry loudly. It is coming from a few local governments that made poor business decisions and now need to be bailed out. They should not be bailed out.

We deregulated telephones, banks, airlines, and other industries. We are moving ahead in electricity. Let's not force waste services to swim upstream against today's currents and become a network of flow monopolies. If we do, the day will come when the inexorable pressures of the market start tearing the system apart. Let's avoid the pain by saying today that the free market will be allowed to remain open.

In conclusion, Mr. Chairman, flow control and interstate restrictions are wasteful, expensive and unnecessary. I urge the Committee to reject any legislation embodying those concepts. I appreciate the opportunity to have offered this testimony.