Date: Tue, 20 Jun 1995 09:29:15 -0400 (EDT) From: Competitive Enterprise Institute To: Recipients of the CEI List Subject: CEI List: Flow Control GOING AGAINST THE FLOW (CONTROL) by Jonathan H. Adler This article originally appeared as "Going Against the Trash Flow" in the Washington Times, May 10, 1995. The U.S. Constitution was enacted, in part, to eliminate the state-level obstructions to interstate commerce that prevailed under the Articles of Confederation. Under the Interstate Commerce Clause of the Constitution, only Congress can regulate or inhibit trade between the states. Yet now members of Congress are seeking to overturn a two-hundred-year-old Congressional principle by allowing states to restrict both the import and export of solid waste. Floor action in the Senate is expected this week. The Constitution explicitly forbids state and local governments from interfering with interstate commerce. The Supreme Court has consistently held that "a State may not accord its own inhabitants a preferred right of access over consumers in other States to natural resources located within its borders." This was the judgement of the Supreme Court when New Jersey sought to prevent the importation of solid waste from Pennsylvania. Ironically, Pennsylvania is now trying to prevent waste from flowing in the opposite direction. Interstate trade in waste occurs because communities and waste disposal companies are always looking for the least expensive and most efficient means of handling trash. Sometimes this means using a local recycling facility, in other cases it means hauling the waste to a landfill, perhaps one across state lines. As a result, the majority of states both import and export solid waste. In 1992, for example, 47 states exported waste and 42 state imported waste from other parts of the country. States that seek to limit the interstate transportation of waste argue that some states should not be the dumping grounds for others. In effect, they argue that all states should be self- sufficient with regard to waste disposal services. This makes no more sense than arguing that all states should be self-sufficient with regard to food production, mineral supplies, or television broadcasting. Should the state of Indiana be forced to supply all of its own mineral needs? Food sources? Television programming? Of course not. And for the same reason, no state should be forced to supply all of its own waste management capacity. Congress is considering further inhibiting interstate commerce by allowing states implement solid waste "flow control." Flow control is the practice whereby local governments require all waste within their jurisdiction to be processed at designated facilities. Last year, the Supreme Court ruled that flow control is no less an unconstitutional infringement on interstate commerce than waste import limitations. Flow control confers a portion of the solid waste management market to politically-preferred constituencies at the expense of consumers. As such, flow control statutes are fundamentally incompatible with the principles of free enterprise, market competition and the consumers' interest. The anti-competitive nature of flow control is even acknowledged by its proponents, albeit reluctantly, or unwittingly. "I've never really thought of it as anti-competitive," commented one waste hauler, "With flow control, none of the haulers have to worry about a competing transfer station or a cheaper out-of-state landfill. Everybody pays the same rate." Moreover, by subsidizing waste management facilities that are not cost-competitive, flow control increases waste disposal costs for consumers. According to one recent study, flow control increases disposal costs by 40 percent, or $14 per ton. The experience of Northvale, New Jersey, demonstrates the costly nature of flow control. Northvale was paying waste disposal fees of over $100 per ton of solid waste. After the Supreme Court invalidated flow control, Northvale received offers to provide the same services for approximately $80 per ton. Such a massive decrease in waste management costs gives towns like Northvale more money to devote to other things, from expanded municipal services to tax relief. As a result of his experience, Northvale Mayor John Rooney remarked that "Any politician in favor of flow control is in favor of higher taxes." While interstate trade restrictions and flow control are portrayed as environmental measures, environmental groups do not buy it. Earlier this year, a broad coalition of free market and environmental organizations sent a letter to members of the Senate Environmental Committee opposing flow control. Signatories to the letter ranged from officers of Citizens for a Sound Economy and the Heartland Institute to the New York PIRG and Clean Water Action. It is ironic that the United States Congress is considering restricting the interstate flow of goods and services at the same time the world is moving toward a more integrated global economy. The same Congress that has sought to remove barriers to trade between nations is considering erecting barriers to trade between states and communities. This directly contradicts the free-market rhetoric employed by advocates of the Contract with America. Trade, whether between individuals, communities or nations, is a mutually beneficial undertaking. It is an essential element of the free enterprise system. Interfering with the ability of parties to engage in voluntary transactions always comes at significant cost. Allowing state to meddle in the free flow of products and services across state lines would be a tremendous mistake. Tagline: Jonathan H. Adler is associate director of environmental studies at the Competitive Enterprise Institute. _______ __________ ___________ / | / | | | |__________ | | | | \ | | \ _______ |__________ ___________ COMPETITIVE ENTERPRISE INSTITUTE 1001 Connecticut Ave. NW #1250 Washington, DC 20036 202-331-1010, fax 202-331-0640 Permission to reprint must be obtained from the publishing journal listed above. Permission to copy granted as long as these lines are left intact. To subscribe to the cei list, send a message to CEI@digex.com. "The Virtual Hand: CEI's free-market guide to the information superhighway" is available for $5. CEI's monthly newsletter, "CEI UpDate," is free to contributors of $25.