Flow blow: Wasteworks may seek trash monopoly
Rivanna Solid Waste Authority director Tom Frederick has long contended that the Authority’s now $20 million RICO lawsuit against Peter Van der Linde has nothing to do with the competing trash facility the private businessperson opened last December, an $11 million Materials Recovery Facility that quickly captured the local market for construction debris and commingled recyclables. But on the eve of Van der Linde's opening of an expansion that would also take household trash for recycling–- a move that could potentially siphon off the Authority’s remaining revenue stream–- the Authority is now discussing an option that could put the recycling entrepreneur out of business.
“If they hand over Ivy to Waste Management, Allied, or some other big company with a flow-control guarantee,” says Van der Linde, “I’m doomed.”
Unaware of flow-control? Don’t worry, several Board members, including City Councilor David Brown, weren’t initially clear on the concept either.
However, according to Van der Linde, who attended the RSWA Board’s September 22 meeting, flow-control is even more heavy-handed than the Authority’s lawsuit, which alleges that he and his employees conspired in the past to bilk the Authority out of millions in tipping fees.
Flow-control would let government decree where all trash is taken. Flow-control could even make it illegal for anyone from the county or the city to bring their trash to Van der Linde, as it would force haulers to use a government-approved facility.
If it may sound un-American, the practice was actually upheld in 2007 by the U.S. Supreme Court. In United Haulers v. Oneida-Herkimer, the six-Justice majority condoned flow-control for publicly-owned facilities because it allows government to ensure, thanks to the steady flow of tipping fees, that trash collection and recycling follow all regulations–- instead of getting left to the whims of the marketplace.
Not all the Justices tremble before the whims of the marketplace. Samuel Alito, who was joined by John Paul Stevens and Anthony Kennedy, slammed the ruling for its "economic protectionism," maintaining there was no real difference between it and an earlier ruling, C & A Carbone, Inc. v. Clarkstown in 1994, which did not make the private/public distinction and held that flow-control laws "discriminated against interstate commerce."
However, some legal observers believe the current Supreme Court ruling does not adequately define "publicly-owned," an omission that could leave the law open to interpretation
“Questions will come up, for example, when the facility is publicly owned and privately operated,” said Barry Shanoff, outside legal counsel for the Solid Waste Association of North America (SWANA), after the 2007 ruling. “As a result of this decision, we're going to see all sorts of flow-control scenarios unfold.”
At Tuesday’s trash meeting, just such a scenario unfolded, as RSWA Board members discussed the possibility of adopting a flow-control ordinance with a publicly-owned, but privately built and operated facility at what used to be called the Ivy Landfill.
This public/private "hybrid," as Authority lawyer Kurt Krueger referred to it, would be a way to fund a new facility, and as Krueger explained, might also allow the Authority to enforce flow-control under the new law.
County Supervisor Ken Boyd–- a Republican who, during the meeting, called himself a “free market kind of guy”–- raised the idea of privatizing Ivy, but said he hoped a new facility would be a “market-driven thing” and that they “wouldn’t have to dictate where the trash goes.”
However, Krueger quickly pointed out that there wouldn’t be much of an incentive for any firm to respond to an RFP if it weren't accompanied by a flow-control ordinance. When board member Brown asked if two RFPs could be issued, one with a flow-control ordinance and one without, Krueger sounded amused.
“You could," Krueger responded, "but I’m not sure what the response would be.”
City public works director Judy Mueller, who first uttered the words “flow-control” at the meeting, seemed to concur that companies would balk at an RFP without flow-control. “They’d want to know what kind of quantities they would get," said Mueller. "That’s the key.”
“So not many people would go for the no flow-control option,” noted Boyd.
“That way," said Board member Mark Graham, highlighting the benefits of a flow-control ordinance, " you’re sure of your market before you make an investment."
While enacting a flow-control ordinance would require approval from both area governments, and considerable discussion from the public, the trash Board’s new “shift in direction,” as Boyd characterized it, appears to have laid the ground work.
“In all fairness to Tom [Frederick], he only has 24 hours in a day,” said Mueller in the final minute of the 10-minute discussion, “and there are a lot of things on his plate. I’d like to ask the board to give us a few thousand dollars to get some outside help to get this RFP together.”
So will the RFP include a flow-control ordinance? Apparently, we won't know until it is written and presented to the Board.
"I do not believe the Board directed the staff on the specifics of how to write the RFP," says Frederick, who did not rule out the possibility of adopting a flow-control ordinance.
Ironically, as the Authority struggles to survive, the man they’re suing appears to be thriving. So far.
“I’ll be hauling one hundred percent of my stuff there,” says trash hauler Frank McCauley, eagerly anticipating the open-any-day-now household trash facility. “Peter’s facility is changing the landscape of the trash hauling business.”
Gene Ware, who says Van der Linde has made it possible for Time Disposal to offer curbside recycling, says he’s seen a “tremendous” increase in the number of his customers recycling.
While Ware says Time hasn’t decided yet about taking household trash to Van der Linde, he suggests that the big factor is tipping fees, which typically start at $62 at the current government-approved facilities.
"It’s economics for us,” says Ware. “If he’s $44 a ton”Š.”
Of course, if the Authority succeeds in getting a flow-control ordinance passed, it won’t much matter what innovations Van der Linde unleashes.
“Residents and businesses should prepare themselves for dramatic price increases,” according to the general counsel of the National Solid Wastes Management Authority in a 2007 trade magazine story. “Flow control creates a local waste monopoly insulated from free-market competition.”
“Obviously, no one is going to go near this thing without flow-control,” says Van der Linde. “They are really turning back the hands of time if they decide to do this.”
February 14, 2008–Coming soon! van der Linde's amazing recycling machine
April 2, 2009–What a Waste: Is the trash Authority going obsolete?
May 29, 2009–Recycle this! Van der Linde steps up tone
August 17, 2009–Trash talkin’: Waste war could decide the future
August 17, 2009 Don Van der Linde? Wasteworks Whacks Recycler with RICO
Updated 9/29/2009 2:43pm