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Reason Foundation

Supreme Court Ruling Threatens Privatization

Geoffrey Segal
July 4, 2007, 12:22pm

Several weeks ago the U.S. Supreme Court ruled that local governments can compel private waste haulers to use municipal owned facilities. In the case of United Haulers Association v. Oneida-Herkimer Solid Waste Management Authority (05-1345), the justices voted 6-3 to uphold so-called "flow control" laws or ordinances that municipalities have used to assure a steady waste and revenue stream into publicly financed waste facilities. The ruling partially overturns an earlier finding in Carbone reached back in 1994. There, the Court ruled that trash was subject to the Commerce Clause of the Constitution and therefore protected. The ruling in Oneida skirts this because the facility in question is publically owned. Given this, its likely to encourage other municipalities to introduce flow control -- indeed, its already happening. Not only will prices get jacked up (absent competition, local governments can raise rates significantly -- in the case the local fee was three times the out of state charge, and more than $20/ton more than the weighted average of facilities within a 100 miles) but incentives for private investment/operation of landfills will be threatened. Do you recall the "garbage crisis" of the 1980's, when the forlorn garbage barge, full of New York city's trash, cruised up and down the East Coast looking for somewhere to dump its load. While it littered the headlines a decade ago, you hardly hear about it anymore. In fact, the "crisis" of insufficient landfills went away, almost unnoticed, and the nation now has more landfill space than ever before. Thanks to a government program? Nope. It was privatization that made a difference -- largely spurred by the USSC rulling against flow control in Carbone.


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